A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The journal entry that Klein makes on March 20 is:

The acid-test ratio differs from the current ratio in that:

The use of the direct write-off method is allowed under the materiality constraint.

Multiple-step income statements:

Axle Co.’s accounts receivable turnover was 9.9 for this year and 11.0 for last year. Betterman’s turnover was 9.3 for this year and 9.3 for last year. These results imply that:

The use of the direct write-off method is allowed under the materiality constraint.

Liquidity refers to a company’s ability to pay its long-term obligations.

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $13,162. Franklin’s August bank statement shows $14,237 on deposit in the bank. Determine the adjusted cash balance using the following information:       Deposit in transit $ 4,500 Outstanding checks $ 3,900 Bank service fees, not yet recorded by company $ 50 The bank collected on a note receivable, not yet recorded by the company $ 1,725 The adjusted cash balance should be:

Delivery expense is reported as part of general and administrative expense in the seller’s income statement.