Rains Company Is a Furniture Retailer

question 177

Multiple Choice

Rains Company is a furniture retailer.On January 14, 2022, Rains purchased merchandise inventory at a cost of $60,000.Credit terms were 2/10, n/30.The inventory was sold on account for $100,000 on January 21, 2022.Credit terms were 1/10, n/30.The accounts payable was settled on January 23, 2022, and the accounts receivables were settled on January 30, 2022.Which statement is correct?

• A)Cash flows were affected on January 14 and January 21.
• B)Gross profit percentage is 60%.
• C)On January 30, 2022, customers should remit cash in the amount of $99,000.
• D)There is not enough information available to answer this question.

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Definitions:

Equilibrium Quantity

The quantity of goods supplied is equal to the quantity of goods demanded at the market equilibrium price.

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Inferior Good

A type of good for which demand decreases as the income of consumers increases.

Demand Curve

A diagram that shows how the quantity of a product demanded by buyers changes according to its price.