Phillips Corp

question 51

Multiple Choice

Phillips Corp.purchased raw materials with a catalog price of $60, 000.Credit terms of 3/15, n/60 apply.If Phillips uses the net price method, the purchase should be recorded at

• A)$61, 800
• B)$60, 000
• C)$58, 200
• D)$51, 000

---

Definitions:

Unrealized Gain

An increase in the value of an asset that has not been sold yet; hence, the gain is not reflected in the income statement.

Stock Investment

The purchase of shares in a company with the expectation of earning a return in the form of dividends or capital gains.

Dividend

A portion of a company's earnings distributed to its shareholders as a return on their investment.

Short-Term Investments

Financial assets that are easily convertible into cash or are expected to be converted into cash within a short period, usually one year or less.