Midterm #2 (ch: 5,6,8,9,14)

Lifo Inventory: The company uses LIFO to value it's inventory. On January 1st they had 500 items valued at $ 7.50 each. During January they purchased 50 more for $ 8.00 each and in February 100 more for $ 9.00 each. In March they wound up selling 200 items. How much was cost of sales for March ?

$1,675

The company buys 300 pens from a manufacturer for $ 600. The goods are shipped FOB shipping point and the shipping costs are $ 50. The company takes a $ 100 credit allowance for the pens arriving late. What is the final cost to the company per pen?

$1.83

Rutgers buys computers for $ 1200 a piece. On March 15th, 2015 it buys 100 computers. The computers are shipped FOB shipping point and Rutgers is charged $ 600 for shipping. The terms of payment are 3/10, net 30 and Rutgers pays for the computers on March 20th, 2015 taking advantage of the discount. How much is the cost per computer ?

$1170

Price per Unit :The Book Store recently received a shipment of 1000 books costing $ 13,000. In addition they were charged shipping of $ 250. They returned 100 books for full credit and negotiated an additional allowance of $ 1.25 per book because of damages. How much is their cost per book ?

$12.03

The Cohn Company inventory transactions were as follows: June 1- Purchased 8 pens @ $ 1.25 each June 2- Sold 6 pens @ $ 2.50 each June 9- Purchased 12 pens @ $ 1.50 each June 11- Sold 10 pens @ $ 3.50 each June 15- Purchased 20 pens @ $ 1.90 each What is the Company's inventory balance ( in $ ) at June 15th using the FIFO method of inventory?

$44

Based on the following information compute the gain or loss on the transaction: Asset cost $ 20,000 Accum Deprec through Dec 31,2013 $ 10,000 10 year life- straight line depreciation Date of sale- June 30, 2014 Residual value $ 1,000 Sale price $ 15,000

$5,950

A company sells merchandise to a customer with terms of 2/10, net 30. The customer ALWAYS pays during the discount period . The customer buys 400 tables at $ 250 per table. They return 20 tables for full credit and in addition get an additional allowance on the remaining tables of $ 20 per table. What is the amount of the check the customer will send the Company when they pay the invoice ?

$85,652

At year end the Brite Company had A/R as follows:0-30 Days- $ 10,000 30-60 days $ 25,000 and over 60 days -$45,000. It reserves 1% 0n 0-30 day accounts, 2% on 30-60 day accounts and 3 % on accounts over 60 days. If the balance in the A/R reserve was $ 1,000 before the year end adjustment, how much should the year end adjustment be ?

$950

Compute the Company's gross profit percentage using the following accounts Inventory, December 31, 2013 $ 195,000 Sales -Gross 550,000 Cost of sales 200,000 Sales returns 15,000 Sales allowances 10,000 Sales discounts estimated 5,000

61.5%

What are examples of Current Assets?

Inventory, prepaid rent, cash

Which of the following is NOT a type of Cash Flow?

Non-operating

The Canon Company borrowed $ 2,500,000 on April 18, 2013. The note is payable in 6 months and interest is due and payable monthly. The interest rate of the note is 5.25 %. How much is Canon's interest expense for the month of July ?

$10,937.50

The Cohn Company used the WEIGHTED AVERAGE METHOD for valuing it's inventory. Based on the following transactions what was the Company's gross profit for the month of May ? May 1 - Purchased 100 pens @ $ 1.20 each May 5 - Sold 30 pens @ $ 2.50 each May 10- Purchased 70 pens @ $ 1.40 each May 15 - Sold 40 pens @ $ 2.50 each May 30 - Sold 10 pens @ $ 2.80 each

$102

The Cohn Company's inventory transactions were as follows: May 1-Purchased 20 pens @ $ 2.00 each May 31-Purchased 25 pens @$2.25 each June 15-Purchased 30 pens @$2.45 each June 27 - Sold 27 pens @ $ 3.00 each June 30- Sold 17 pens @ $ 3.00 each How much was the Company's cost of goods sold ( C/O/S ) for the period May 1- June 30 ? The Company uses LIFO inventory !

$105

The Company buys 300 pens from a manufacturer for $ 600 on June 10th under terms of 3/10 net 30. The pens are shipped FOB destination with the shipping costs of $ 100 being paid by the seller. The Company returns 30 of the pens on June 12th and pays for the balance on June 22nd. What is the final cost per pen to the Company ?

$2.00

The Company buys 300 pens from the manufacturer for $ 600. The pens are shipped FOB shipping point with the buyer paying the $ 100 shipping cost. The next day they return 20 pens. The Company then takes a $ 50 purchase allowance on the remaining pens. The terms of the invoice were 2/10, net 30. The pens were sold on May 15th and paid for on May 20th taking advantage of the discount. How much was the inventory cost per pen ?

$2.142

A Company purchases 500 items for $ 1,500 on January 10, 2019. The invoice terms are 2/10, net 30. The Company pays the invoice on January 15, 2019 taking advantage of the discount. On February 1, 2019 the Company sells 8 of the items. How much are cost of sales related to the sale ?

$23.52

A company borrowed $ 50,000 on January 25, 2014 on a 90 day note with interest at 6 %. What should be the balance in accrued interest payable on February 28, 2014 ( 365 day year ) ?

$279.45

Inventory pricing- A company sells chairs. They use the FIFO method to value their inventory. On January 1st, 2015 they have 50 chairs in inventory costing $ 40 each. They purchase 100 chairs during 2015 costing $ 50 each. On December 31st, 2015 they have remaining in inventory 40 chairs. The replacement cost of chairs at December 31st is now $ 38 each. The correct inventory value per chair at December 31st, 2015 is ?

$38

Compute Goodwill on this transaction: Sales price of net assets - $ 22,000,000 Book value of assets sold $ 20,000,000 Liabilities sold ( equal to market value ) $ 6,000,000 Market value of assets sold $ 24,000,000

$4,000,000

The Cohn Company inventory transactions were as follows: May 1- Purchased 12 pens @ $ 1.50 each May 2- Sold 6 pens @ $ 3.00 each May 9- Sold 2 pens @ $ 3.25 each May 15- Purchased 20 pens @ $ 1.75 each What is the Company's inventory balance ( in $ ) at May 15th using the FIFO method of inventory?

$41

At year end the Brite Company had A/R as follows: 0-30 Days: $12,000 30-60 Days: $29,000 Over 60 days: $34,000 It reserves 1% 0n 0-30 day accounts, 2% on 30-60 day accounts and 3 % on accounts over 60 days. If the balance in the A/R reserve was $ 1,200 before the year end adjustment, how much should the year end adjustment be ?

$520

Using the following partial list of accounts compute the company's gross profit: Net sales $80,000 Sales expenses 12,000 Rent expense 20,000 Cost of sales 22,000 Sales discounts forfeited 6,000 Sales salary 5,000 Insurance expense 4,000 Freight out 2,000 Depreciation expense 9,000

$58,000

Based on the following information how much is depreciation for 2014 ? Car purchased- September 30, 2013 Purchase price- $ 30,000 + 7 % sales taxLife- 4 yearsSalvage value- $ 5,000Method- Straight line

$6,775

FIFO- Inventory : The Company uses the FIFO method to value it's inventory. On January 1st they had 500 items with a total value of $ 1000. On January 5th they purchased 500 more for $ 1200 and on January 12th 500 more for $ 1500. They had sales of 300 items on January 7th and 400 on January 15th. How much was cost of sales for the January 7th sale ?

$600

The Cohn Company's inventory transactions were as follows: May 1- Purchased 10 pens @ $ 2.50 each May 31- Purchased 15 pens @ $ 2.20 each June 15 - Purchased 20 pens @ $ 2.00 each June 27 - Sold 14 pens @ $ 3.00 each June 30- Sold 16 pens @ $ 3.00 each How much was the Company's cost of goods sold ( C/O/S ) for the period May 1- June 30 ? The Company uses LIFO inventory!

$62

A Company borrows $ 2,800,000 on July 20,2018. The interest rate on the loan is 9%. The loan is for 90 days. How much interest should be accrued on July 31,2018 ?

$7,594

A company borrowed $ 25,000 on November 1, 2013. The term of the note was 6 months and the interest rate was 8.5 %. How much is interest expense on the note for 2014 ?

$708

Company A purchased 50 items for $ 750. In addition shipping costs were $ 50 (FOB Shipping point). The Company returned 10 items for full credit. They then sold ½ the inventory for $ 20 a piece. The gross profit percentage on the sale of the inventory was ?

18.75%

Based on the following accounts compute the quick ratio for the CBC Company: Furniture $ 31,000 Long term liabilities-- $ 40,000 Accum Depre-Furn $ 15,000 Short term investments- $ 19,000 Cash $ 18,000 Current liabilities $ 34,000 Inventory $ 80,000 Bad debt expense $ 9,000 Accounts Rec- $ 42,000Reserve for bad debts- $ 5,000

2.18

Based on the following accounts compute the quick ratio for the CBC Company: Furniture $ 25,000 Long term liabilities-- $ 50,000 Accum Depre-Furn $ 12,000 Short term investments- $ 15,000 Cash $ 15,000 Current liabilities $ 25,000 Inventory $ 75,000 Bad debt expense $ 8,000 Accounts Rec- $ 35,000 Reserve for bad debts- $ 5,000

2.4

The Canon Company borrowed $ 1,250,000 on April 18, 2013. The note is payable in 4 months and interest is due and payable monthly. The interest rate of the note is 3.68 %. How much is Canon's interest expense for the month of July ?

3,833.33

Based on the following data, compute Expo Inc.'s Inventory Turnover for 2013: Inventory - December 31, 2012 $ 525,000 Sales 2,500,000 Sales returns 100,000 Cost of goods sold 1,750,000 Inventory - December 31, 2013 575,000

3.18

Based on the following data, compute Expo Inc.'s Inventory Turnover for 2013. Inventory - December 31, 2012 $ 425,000 Sales 2,250,000 Sales returns 200,000 Cost of goods sold 1,750,000 Inventory - December 31, 2013 448,000

4.01

Compute the Company's gross profit percentage using the following accounts: Inventory, December 31, 2013 $ 175,000 Sales -Gross 500,000 Cost of sales 250,000 Sales returns 18,000 Sales allowances 12,000 Sales discounts estimated 8,000

45.9%

Based on the following facts compute the balance in Net Accounts Receivable at December 31, 2014. Accounts Receivable at December 31, 2014 - $ 554,000 Allowance for Uncollectibles, Dec 31, 2013- $ 22,500 Account receivable write offs for 2014- $ 72,500 Recoveries for 2014 $ 15,000 Bad debt expense for 2014- $ 75,000

514,000

The Company buys 150 pens from the manufacturer for $ 900. The pens are shipped FOB shipping point with the buyer paying the $ 100 shipping cost. The next day they return 20 pens. The Company then takes a $ 80 purchase allowance on the remaining pens. The terms of the invoice were 2/10, net 30. The pens were sold on May 15th and paid for on May 20th taking advantage of the discount. How much was the inventory cost per pen ?

6.046

Based on the following facts compute the balance in Net Accounts Receivable at December 31, 2014: Accounts Receivable at December 31, 2014 - $ 653,000 Allowance for Uncollectibles, Dec 31, 2013- $ 32,500 Account receivable write offs for 2014- $ 82,500 Recoveries for 2014 $ 12,500 Bad debt expense for 2014- $ 65,000

625,500

Gross profit percentage: Based on the following numbers compute the Company's correct gross profit percentage: Sales- $ 1,250,000 Rent expense $ 85,000 Sales returns 61,000 Cost of goods sold $ 361,000 Sales discounts 23,000 Accrued expenses $ 75,000 Inventory-beginning $ 8,000,000 Inventory-ending $ 7,500,000

69.0%

Using the appropriate accounts below compute the Company's Accounts Receivable Turnover Ratio for 2019: Accounts Receivable-Dec 31, 2018 $ 350,000 Reserve for Bad Debts- Dec 31, 2018 $ 45,000 Accounts Receivable- Dec 31, 2019 $ 175,000 Reserve for Bad Debts- Dec 31, 2019 $ 55,000 Credit sales - 2019 $ 1,800,000 Sales returns-2019 $ 14,000 Sales discounts- 2019 $ 20,000 Bad debt expense- 2019 $ 67,000

8.31

Using the appropriate accounts below compute the Company's Accounts Receivable Turnover Ratio for 2014: Accounts Receivable-Dec 31, 2013 $ 200,000 Reserve for Bad Debts- Dec 31, 2013 $ 20,000 Accounts Receivable- Dec 31, 2014 $ 250,000 Reserve for Bad Debts- Dec 31, 2014 $ 35,000 Credit sales - 2014 $ 2,000,000 Sales returns-2014 $ 15,000 Sales discounts- 2014 $ 18,000 Bad debt expense- 2014 $ 50,000

9.96

A company purchases inventory on June 10th for $ 500 and pays for it on June 15th in accordance with the terms of the invoice., which were 2/10, net 30. What is the correct entry on June 15th to record the payment ?

A debit to accounts payable for $ 500, a credit to cash for $ 490 and a credit to inventory for $ 10

A company purchases inventory on June 10th for $ 600 and pays for it on June 15th in accordance with the terms of the invoice., which were 3/10, net 30. What is the correct entry on June 15th to record the payment ?

A debit to accounts payable for $600, a credit to cash for $582 and a credit to inventory for $18

If I was running a Company which comparison of " actual gross profit " is most relevant ?

A.Compared to " prior year gross profit " B.Compared to " industry norm gross profit " C.Compared to " budgeted gross profit " D.Compared to " my closest competitor's gross profit " D. All of the above D.

Using the following facts, compute the Company's correct Gross Profit Percentage AND Inventory Turnover rate for 2018; Inventory- January 1, 2018 $ 500,000 Sales- 2018 $ 2,500,000 Cost of Sales -2018 $ 1,750,000 Inventory-December 31, 2018 $ 900,000

A.G/P- 30% I/T- 2.5 times

Which method of accounting for bad debts is in accordance with GAAP ?

Allowance method

On February 1st the Company purchased 10 chairs for $ 50 a piece. On February 5th they purchased another 10 chairs for $ 55 a piece. And on February 10th they purchased 20 chairs for $ 47 a piece. On February 20th they sold 8 chairs. On an accounting basis which group did they sell the chairs from ?

Can't determine from information given

The inventory account of the ABC Company shows a balance of $ 40,000 before the year end inventory count. The count shows there's only $ 39,000 of actual inventory. The adjustment needed to the ledger is :

Credit inventory $ 1,000 Debit cost of sales $ 1,000

The client supplies you with the following information about a new machine they purchased: Cost $ 50,000 Estimated useful life- 10 years Salvage value- $ 3,000This is enough information to enable you to compute depreciation

False

The Lucy company decides to sell one of its machinery. The sale occurs on Jan 1, 2019. The truck originally cost $30,000 and there was $10,000 of accumulated depreciation as of December 31st 2018. The company uses straight line method of depreciation and had assigned the machinery a 6 year life with no residual value. The truck sold for $45,000, compute the gain or the loss.

Gain - $25,000

Gain on sale : The Mark Company decides to sell one of it's trucks. The sale occurs on June 30, 2016. The truck originally cost $ 25,000 and there was $12,000 of accumulated depreciation on it as of December 31st, 2015. The company uses straight line depreciation and had assigned the truck a 5 year life with no salvage value. The truck is sold for $ 12,000 . Compute the gain or loss.

Gain of $1,500

Which of the following is the only one where all the items are decreases to net income in determining Cash Flows from Operating Activities?

Increase in inventory, decrease in accounts payable and a gain from sale of a building

The Cooper Company purchases land, a hotel building, and hotel machinery for a discounted price of 2,450,000. At the time of purchase the appraised value of the land was 750,000, the building 1,900,000 and the equipment for 200,000. The correct values to be recorded on the books are ?

Land $644,737 - Bldg $1,633,333 - Equip $171,930

A Company just completed the acquisition of property for $ 1,200,000. The appraisal shows the values as follows: Land $ 750,000 Land improvements $ 350,000 Building $ 400,000 What is the proper allocation of the purchase price on the books ?

Land- $ 600,000, Land Imp-$ 279,960, Bldg- $ 320,040

Basket Purchase- The DT Company purchases a property for $ 2,500,000. Included in the sale is land, a building and equipment. The appraised value of the land is $ 800,000, the building $ 1,000,000 and the equipment $ 900,000. The correct values to be recorded for these assets on DT's books is (round)?

Land- $ 740,800, Building- $ 926,000 and Equip- $ 833,200

Which of the following items should be added back to Net Income in determining Cash Flow from Operating Activities?

Loss on sale of an old machine

If a Company finds that the amount of customer accounts it has to write off as uncollectible is increasing annually that indicates their control over collections is worsening

Not Necessarily

At the end of 2013 The DEF Company overstates their inventory but reports the correct inventory at the end of 2014, As a result :

Profit for 2014 understated and profit for 2013 is overstated

Which of the following is an example of a non-cash transaction ?

Purchasing treasury stock for a note