ACC 211 exam 2

A company purchased inventory as follows: 150 units at $10 350 units at $12 The average unit cost for inventory is

$11.40

Pappy's Staff has the following inventory information. July 1 Beginning Inventory 10 units at $90 5 Purchases 60 units at $92 14 Sale 40 units 21 Purchases 30 units at $95 30 Sale 28 units Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?

$2,930

Pappy's Staff has the following inventory information. July 1 Beginning Inventory 10 units at $90 5 Purchases 60 units at $92 14 Sale 40 units 21 Purchases 30 units at $95 30 Sale 28 units Assuming that a perpetual inventory system is used, what is the ending inventory on an Average-Cost basis?

$2,987

Helmway Company purchased equipment and these costs were incurred: Cash price $21,500 Sales taxes $1,800 Insurance during transit $320 Installation and testing $430 Total costs $24,050 Presto will record the acquisition cost of the equipment as

$24,050

Pappy's Staff has the following inventory information. July 1 Beginning Inventory 10 units at $90 5 Purchases 60 units at $92 14 Sale 40 units 21 Purchases 30 units at $95 30 Sale 28 units Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

$3,034

The cash account shows a balance of $45,000 before reconciliation. The bank statement does not include a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of $940 and a customer's check for $320 was returned because it was NSF. A customer's check for $450 was recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the cash account was

$45,548. 45,000+940-320-(540-450)+(97-79)=45,548

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2012 are as follows: Units Per unit price Total Balance, 1/1/12 200 $5.00 $1,000 Purchase, 1/15/12 100 5.30 530 Purchase, 1/28/12 100 5.50 550 An end of the month (1/31/12) inventory showed that 140 units were on hand. How many units did the company sell during January, 2012?

260 units available for sale 400 - ending inventory 140 = 260 units sold

A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its 6-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

33% (1/6)*2=.33

A company purchased factory equipment for $250,000. It is estimated that the equipment will have a $25,000 salvage value at the end of its estimated 10-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

40,000 250,000*[(1/10)*2]=50,000 year 1; (250,000-50,000)*[(1/10)*2]=40,000 year 2

A company purchased factory equipment on March 1, 2012 for $64,000. It is estimated that the equipment will have an $8,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2012 is

4667 (64000-8000)/10 = 5600 per year * (10/12) = 4667

A factory machine was purchased for $75,000 on January 1, 2010. It was estimated that it would have a $15,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 5,000 actual hours in 2010. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2010 would be

7,500 (75,000-15,000)/40,000 = 1.5 per hour * 5,000 = 7,500`]

When a note receivable is dishonored,

Accounts Receivable is debited if eventual collection is expected.

A 60-day note receivable dated June 14 has a maturity date of

August 13 30-13=16 days in June, 31 days in July; 60-16-31=13 days in August

The cost flow method that often parallels the actual physical flow of merchandise is the Correct!

FIFO method

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using Correct!

FIFO will have the highest ending inventory.

Which of the following statements is correct with respect to inventories?

Under FIFO, the ending inventory is based on the latest units purchased.

The one characteristic that all entries recorded in a cash payments journal have in common is

a credit to the cash account.

The declining-balance method of depreciation produces

a decreasing depreciation expense each period.

If a check correctly written and paid by the bank for $428 is incorrectly recorded on the company's books for $482, the appropriate treatment on the bank reconciliation would be to

add $54 to the book's balance.

The book value of an asset is equal to the

asset's cost less accumulated depreciation.

Trade accounts receivable are valued and reported on the balance sheet

at net realizable value.

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

cost to replace the asset

A truck that cost $36,000 and on which $30,000 of accumulated depreciation has been recorded was disposed of for $5,000 cash. The entry to record this event includes a

credit to the Truck account for $36,000. debits to cash for $5,000, accumulated depreciation for $30,000 and loss on sale for $1,000; credit to truck for $36,000

A petty cash fund of $100 is replenished when the fund contains $3 in cash and receipts for $93. The entry to replenish the fund would

debit Cash Over and Short for $4. debit expenses for $93, debit cash over and short for $4, credit cash for $97

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

debit accounts receivable, credit cash

Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $1,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

debit bad debt expense and credit allowance for doubtful for $10,000

Rodgers Company lends Lanier Company $10,000 on April 1, accepting a four-month, 6% interest note. Rodgers Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared?

debit interest receivable, credit interest revenue for $50 10,000 * .06 * (1/12) = 50 per month

Posting a sales journal to the accounts in the general ledger requires a

debit to Accounts Receivable and a credit to Sales.

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

debit to Bad Debts Expense for $7,900.

The cost of goods available for sale is allocated between

ending inventory and cost of goods sold.

Deposits in transit

have been recorded on the company's books but not yet by the bank.

If a transaction cannot be recorded in a special journal

it is recorded in the general journal.

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when

management estimates the amount of uncollectibles.

When a note receivable is honored, Cash is debited for the note's

maturity value. cash received at maturity is the maturity value: principal + interest for the duration of the note

Interest is usually associated with

notes receivable

An adjusting entry is not required for

outstanding checks.

A petty cash fund is generally established in order to

pay relatively small expenditures.

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the

percentage of receivables method

If disposal of a plant asset occurs during the year, depreciation is

recorded for the fraction of the year to the date of the disposal.

The LIFO inventory method assumes that the cost of the latest units purchased

the first to be allocated to cost of goods sold.