Answered: A markup of 25 percent on cost is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. A markup of 25 percent on cost is equivalent to what markup on selling price? (rounded)

choices:

33 percent

25 percent

20 percent

15 percent

2. Tretorn Company began operations in 2018. During the first two years of operations, Tretorn made undiscovered errors in taking its year-end inventories that understated 2018 ending inventory by P40,000 and overstated 2019 ending inventory by P50,000. The combined effect of these errors on reported income for the year 2018, 2019 and 2020 respectively is

choices:

P40,000 understated; P90,000 overstated and P50,000 understated

P40,000 understated; P50,000 overstated and not affected

P40,000 understated; P10,000 overstated and not affected

P40,000 overstated; P50,000 understated and P10,000 overstated

3. Hardy Company is a wholesale electronics distributor. On December 31, 2020, it prepared the following partial income statement: Inventory, January 1 P 200,000; Net Purchases 300,000; Net Sales 600,000.Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance?

choices:

P180,000

P80,000

P120,000

P500,000

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