A Furniture Factory's Employees Work Overtime To Finish An Order That Is Sold On January 31. The Office Sends A Statement To The Customer In Early February And Payment Is Received By Mid-February. The Overtime Wages Should Be Expensed In: | Financial Information Is Presented Below - The Net Profit Margin Would Be | A Credit Sale Of $3,800 Is Made On April 25, Terms 2/10, Net/30, On Which A Return Of $200 Is Granted On April 28. What Amount Is Received As Payment In Full On May 4?

A Furniture Factory's Employees Work Overtime To Finish An Order That Is Sold On January 31. The Office Sends A Statement To The Customer In Early February And Payment Is Received By Mid-February. The Overtime Wages Should Be Expensed In: A) January. B) February. C) the period when the workers receive their checks. D) either January or February depending on when the pay period ends. Financial Information Is Presented Below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 The net profit margin would be A) .28. B) .09. C) .30. D) .10. A Credit Sale Of $3,800 Is Made On April 25, Terms 2/10, Net/30, On Which A Return Of $200 Is Granted On April 28. What Amount Is Received As Payment In Full On May 4? A) $3,528 B) $3,724 C) $3,800 D) $3,600
1. The correct option of this multiple choice question is A, as overtime wages incurred in the month of January. When expenses incurred or loss suffered by the business, these are recorded while revenues are recorded when these are earned. Also, revenues must be matched with all those expenses incurred in earning these revenues during the current accounting period, according to Matching Principle.

The option B is not correct.

The option C is wrong choice as it does not depend upon when the workers received their checks. It depends upon when the overtime wages are expensed.

The option D is also not correct as it doesn’t not depend upon when the pay period ends.

2. The correct option is B as proved below:

We know that Net Profit Margin Formula is:

Net Income / Total Revenue x 100

So, here we need to find out Total Revenues and Net Income to calculate Net Income Margin.

 Total Revenues = Sales Revenues = $150,000

Net Income = Total Revenues - Total Expenses

Net Income = $150,000 - $136,000 = $14,000

Here:

Total Expenses = Operating Expenses + Sales returns and allowances + Sales discounts + Cost of goods sold

Total Expenses = $28,000 + $7,000 + $3,000 + 98,000 = $136,000

 By Putting the values in formula, we have:

Net Profit Margin = $14,000 / $150,000 x 100 = 9.33% or 0.09 if we don’t multiple by 100 or expressed in percentage.

3. The correct option of this mcq is A as proved below:

Credit Sales = $3,800

Sales Return = $200

Discount Percentage = 2% (Here terms 2/10, net/30 mean 2% discount will be given, on the amount of net sales, if payment is received within 10 days after the date of sale i.e., 25th April, Otherwise no discount is given and full payment is due within 30 days).

 So, here discount is applicable as the payment is received on 4th May which is 9 days (while 10 days allowed) from the date of sale to the payment date i.e., 25th April - 4th May.

Net Sales = Credit Sales - Sales Return = $3,800 - $200 = $3,600

Discount on net sales = $3,600 X 2% = $72

So, the payment received on 4th May = $3,600 - $72 = $3,528

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