Darlington Company Entered into the Following Business Events During Its

question 52

Multiple Choice

Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $12,400 of merchandise on account under terms 2/10, n/30.2) The company returned $1,900 of merchandise to the supplier before payment was made.3) The liability was paid within the discount period.4) All of the merchandise purchased was sold for $18,800 cash.
What is the gross margin that results from these four transactions?

• A)$8,510
• B)$8,548
• C)$6,400
• D)$6,272

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Definitions:

CCA Class

A categorization in Canadian tax law that determines the depreciation rate for tax purposes on capital assets.

Depreciation Tax Shield

A reduction in taxable income for a business, resulting from the depreciation expense claimed on tangible assets.

Tax Rate

The percentage of income or value that is collected by the government as tax.

MACRS Depreciation

A method of depreciation in the U.S. that allows for a faster write-off of assets under the tax code.