ASSIGNMENT FOR CHAPTER 6:  

1) Best Buy Appliances received an invoice dated August 12 with terms 3/10 E.O.M. for the items listed below:

5 G.E. refrigerators at $980 each less 25% and 5%;

4 Inglis dishwashers at $696 each less 16 2/3%, 12.5% and 4%

a) What is the last day for taking the cash discount?b) What is the amount due if the invoice is paid on the last day for taking the discount?c) What is the amount of the cash discount if a partial payment is made such that a balance of $2,000 remain outstanding on the invoice?

2) Homeland Hardware buys inventory for $6 less 20% per item. The store’s overhead is 45% of cost and the owner requires a profit of 20% of cost.a) For how much should the item be sold?b) What is the amount of markup included in the selling price?c) What is the rate of markup based on selling price?d) What is the rate of markup based on cost?e) What is the break-even price?f) What operating profit or loss is made if an item is sold for $6?

3) Raymond Ltd bought an inventory item for $1,080 less 33 1/3% and 8 1/3%. Overhead for the company is 18% of regular selling price and required profit is 15% of regular selling price. The item was marked at a price so that the company was able to advertise a discount of 25% while still maintaining its profit margin. To clear the inventory, the remaining inventory was marked down 37.5%.

a) What operating profit or loss is realized at the clearance price?b) What is the realized rate of markup based on cost?