TTU Acct. ch5-6 test review

Seth Corp. sold merchandise to Kelly Corp. on November 1st, for $150,000, and accepted a promissory note for payment in the same amount. The note has a term of 3 months and a stated interest rate of 8%. Seth' accounting period ends on December 31st. What amount should Seth recognize as interest revenue on the maturity date of the note, which is January 31st of the following year?

1,000

Rain Uptown Crop Science Corp. has the following information about their inventory: 10/1/2016, Beginning inventory October 1, 250 units $11 each, $2,750 total, 10/6/2016 Purchase 150 units, $12 each, $1,800 total. 10/12/2016 Purchase 350 units, $14 each, $4,900 10/25/2016 Purchase 250 units, $15 each $3,750 Totals 1,000 units, $13,200 During October, Rain Uptown sold 400 units at a price of $20.00. What is the dollar amount of the ending inventory on October 31st, 2016 using the First-in, first-out (FIFO) inventory cost method? (Do Not enter dollar signs.)

$8,650

The McDermott Company showed the following balances on December 31st. Transportation-out 3,000 Purchases 130,000 Purchases returns & allow. 2,000 Transportation-in 1,600 Selling expenses 50,000 Administrative expenses 30,000 What were the net purchases for the year?

129,600

Alien Shirt Co. has the following information regarding its 2017 inventories: 1/1/2017 Beginning inventory, January1 7,500 @ $8.75 for $65,625 3/31/2017 Purchase 1,300 @ $9.25 for 12,025 7/2/2017Purchase 1,800 @ $9.70 for 17,460 11/18/2017 Purchase 6,700 @ $10.25 for 68,675 Totals: 17,300 for $163,785 During 2017, Alien sold 8,000 units at a selling price of $12.00 per unit. Alien has adopted a last-in, first-out (LIFO) method of accounting for inventories. What is Alien's Gross Profit for 2017? $

14,715

During 2016, Roy Ltd. had a beginning inventory of $45,000, ending inventory of $88,000, and a cost of goods sold of $105,000. What was Roy's 2016 cost of goods purchased?

148,000

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts receivable: $3,480,000 (Dr.) Allowance for Doubtful Accounts: $22,000 (Cr.) Net credit sales: $5,500,000 (Cr.) Juan, Inc. estimates bad debt expense as 3% of net credit sales for the year. What amount will Juan report as Bad Debt Expense on the income statement?

165,000

The following is from Spiderman Inc.'s financial accounts. Purchases $190,000 Transportation-In $11,000 Inventory, January 1st, $25,300 Inventory, December 31st $27,900 Purchase Returns and Allowances $6,200 How much will Spiderman report as its cost of goods sold on its income statement?

192,200

The Walking Dead Co. provides services for both cash and on account. The accounts are adjusted monthly. For September, the following information is available: Accounts Receivable on September 1st is $22,400 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $20,000. Services provided during September on account $45,000. During the month collections on account were $34,400 and accounts written off as bad debts were $2,000. What is the September 30th net realizable value of Accounts Receivable?

25,000

New Navy Stores Co. had Merchandise Inventories of $150,000 on January 1st. During the year, the company purchased $230,000. A count of the inventory on December 31st, found total inventories remaining of $105,000. What is the Cost of goods sold for the year?

275,000

Shirley, Inc. had the following information regarding 2016 inventories: January 1 2016 Inventory 1,000 units, $6.00 each, $6,000 total March 8, 2016 purchase 2,000 units, $7.00 each, $14,000 total August 17, 2016 purchase 3,000 units, $8.00 each, $24,000 total Total 6,000 units $44,000 TOTAL During 2016, Shirley sold 2,000 units for $10.00 each. Shirley adopted the LIFO method with a periodic inventory system. Determine cost of ending inventory.

28,000

The Indiana Jones Corp. reported the following information for the month of September 2015: Inventory, September 1, 2015 100 units @ $30 $ 3.000 Purchases: September 9, 2015 50 units @ $32 1,600 September 18, 2015 100 units (4, $33 3,300 September 27, 2015 50 units (4, $34 1 700 Totals 300 units $ 9.60Q During September, Indiana Jones Corp. sold 200 units. The company uses the periodic inventory system. Using the weighted-average method of inventory accounting, compute the cost of the ending inventory. (Do Not enter dollar signs.)

3,200

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts receivable: $3,480,000 (Dr.) Allowance for Doubtful Accounts: $22,000 (Cr.) Net credit sales: $5,500,000 (Cr.) Juan, Inc. estimates bad debt expense as 3% of net credit sales for the year. The net realizable value of Accounts Receivable on the Balance Sheet will be:

3,293,000

The Walking Dead Co. provides services for both cash and on account. The accounts are adjusted monthly. For September, the following information is available: Accounts Receivable on September 1st is $22,400 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $20,000. Services provided during September on account $45,000. During the month collections on account were $34,400 and accounts written off as bad debts were $2,000. The Walking Dead estimates bad debts at 8% of credit sales. The dollar amount for the bad debt adjustment will be:

3,600

The Raider Company had a fire on April 1st, 2018, which completely destroyed its inventory. No physical inventory count had been taken since December 31, 2017. The company's books showed the following balances at the date of the fire: Net Sales $160,000 Inventory, Dec. 31, 2017 40,000 Net Purchases 130,000 Gross profit 20% Determine the cost of inventory destroyed by fire on April 1, 2018

42,000

Kathy Corp. had a Merchandise Inventory account with a balance on January 1, 2016 of $715,000 and the cost of goods purchased was $230,000. The cost of goods sold for 2016 was $520,000. What is the December 31, 2016 ending inventory?

425,000

The Lady in Red Corp. reported the following information for the month of September 2015 September 1, 2015 Inventory 100units, $30 each, $3,000 total September 9, 2015 purchase 50 units, $32 each, 1,600 Total September 18, 2015 purchase 100 units, $33 each, 3,300 total September 27, 2015 purchase 50 units, $34 each, 1,700 total Total: 300 units for $9,60 During September, Lady in Red Corp. sold 150 units. The company uses the periodic inventory system. Using the last-in, first-out (LIFO) method of inventory accounting, compute the cost of goods sold.

5,000

Wolf Inc. made a sale of $10,000 on August 1, accepting a 6-month 12% note. Wolf makes annual adjusting entries. On December 31st, Wolf will make an adjusting entry accruing how much Interest Receivable?

500

On October 1, 2017, Frank Underwood received a 6%, $500,000 note from Claire Barry, a customer. The note is due on March 31, 2018. Frank Underwood's entry on March 31, 2018 to record the payoff of the note would include a debit to Cash for $ [a].

515,000

The Walking Dead Co. provides services for both cash and on account. The accounts are adjusted monthly. For September, the following information is available: Accounts Receivable on September 1st is $22,400 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $20,000. Services provided during September on account $45,000. During the month collections on account were $34,400 and accounts written off as bad debts were $2,000. The Walking Dead estimates bad debts at 8% of credit sales. What is the September 30th balance in Allowance for Doubtful Accounts?

6,000

The Maryam Corp. reported the following information for the month of September 2015: Inventory, September 1, 2015 100 units @ $30 $ 3.000 Purchases: September 9, 2015 50 units @ $32 1,600 September 18, 2015 100 units (4, $33 3,300 September 27, 2015 50 units (4, $34 1 700 Totals 300 units $ 9.60Q During September, Maryam Corp. sold 200 units. The company uses the periodic inventory system. Using the first-in, first-out (FIFO) method of inventory accounting, compute the cost of goods sold. (Do Not enter dollar signs.)

6,250

On April 1, 2017, Clare Barry received a 5%, $600,000 note from John Edwards, a customer. The note is due on September 30, 2017. Clare Barry's entry on September 30 2017 to record the payment received would include a debit to Cash for $ [a].

615,000

On April 1, 2016, Clare Barry received a 5%, $600,000 note from John Edwards, a customer. The note is due on March 31, 2017. Clare Barry has a December 31st year-end. Clare Barry's entry on March 31, 2017 to record the payment received would include a credit to interest revenue of

7,500

Holly, Inc. has the following information regarding inventories for the quarter ending December 31, 2016: Date Description Units Price Amount 10/1/2016 Beginning inventory, October 1 500 $5 $2,500 11/2/2016 Purchase 600 units $6 each 3,600 12/1/2016 Purchase 700 units $7 each 4,900 12/22/2016 Purchase 700 units $8 each 5.600 Totals 2500 $16,600 Holly sold 1,500 units during the quarter at a price of $10.00 per unit. Holly uses the weighted average method of inventory costing with the periodic inventory system. Determine the cost of goods sold for the quarter ending December 31, 2016. (Do Not enter dollar signs.)

9,960

Evan Corp. had January 1, 2015 inventories of $55,000, purchases of $48,000, transportation-in of $15,000, and December 31, 2015 inventories of $20,000. The company uses the periodic inventory system. What was the 2015 cost of goods sold for Evan?

98,000

On December 31, 2018, Bonsai Boards has 15 Maple Sleds at a cost of $1,200 per unit (total inventory of $18,000). The current replacement cost (value) of the inventory is $1,100 per unit (total value of $16,500). Based on the LCM rule, what adjustment, if any, is needed?

Correct COGS 1,500 Inventory 1,500

A company uses the allowance method to recognize bad debts from its customers. The entry required to recognize the bad debt will have what effect on the following elements of the financial statements? Use these abbreviations: Use I for Increase Use D for Decrease Use NC for Not change Total Assets will [a], Net Income will [b]

D (Decrease) For All

Rick Inc. uses an allowance method to account for their Bad Debts. On September 30th, Rick had a balance in Accounts Receivable of $432,000 and a balance of $25,400 in Allowance for doubtful accounts. During October, Rick decided to write off the account of Carl, Inc. of $3,400. The journal entry to recognize this write-off would be: CA = Cash AR = Accounts Receivable ADA = Allowance for Doubtful Accounts BD = Bad Debt Expense SR = Sales Revenue

Debit [ADA] and Credit [AR].

uan, Inc. had the following balances in accounts for the year ending December 31st: Accounts Receivable: $3,480,000 (Dr.) Allowance for Doubtful Accounts: $22,000 (Cr.) Net credit sales: $5,500,000 (Cr.) Juan, Inc. estimates bad debt expense as 3% of net credit sales for the year. The journal entry on December 31st to record bad debt expense for the year would be.... CA = Cash AR = Accounts Receivable BD = Bad Debt Expense ADA = Allowance for Doubtful Accounts SR = Sales Revenue Debit [a] and Credit [b]

Debit [BD] and Credit [ADA]

On July 1, 2017, Nathan Company received a $20,000 promissory note from Dylan Company. The annual interest rate is 8%. Principal and interest are paid in cash at the maturity date of June 30, 2018. If Nathan's fiscal year ends September 30, 2017, the adjusting entry needed is: Debit [a] and Credit [b] CA = Cash AR = Accounts Receivable NR = Notes Receivable AP = Accounts Payable NP = Notes Payable IREC = Interest Receivable IP = Interest Payable IE = Interest Expense IREV = Interest Revenue

Debit [IREC] and Credit [IREV]

n times of rising prices, which inventory cost method (LIFO or FIFO) reflects the highest: Ending Inventory Cost [a] Cost of Good Sold [b] Net Income [c] Taxes [d]

Ending Inventory Cost [FIFO] Cost of Good Sold [LIFO] Net Income [LIFO] Taxes [FIFO]

In times of declining prices, which inventory cost method (LIFO or FIFO) reflects the highest: Ending Inventory Cost [a] Cost of Good Sold [b] Net Income [c] Taxes [d]

Ending Inventory Cost [LIFO] Cost of Good Sold [FIFO] Net Income [LIFO] Taxes [LIFO]

On November 1st, Chipotle Corp. received a $2,000 note from a customer with a rate of 9% interest that is due in six months. The adjusting entry on December 31st for this note receivable would be: A Debit to [a] and a Credit to [b] for $[c].

Interest Receivable, Interest Revenue, $30

A company uses the allowance method to recognize bad debts from its customers. The entry required to write off uncollectible accounts will have what effect on the accounting equation? Use the following abbreviations: Use I for Increase Use D for Decrease Use NC for Not change Total Assets will [a], Total Liabilities will [b], Total Owners' Equity will [c].

NC (Not change) For ALL

At Dec. 31, 2018, Ending Inventory for ABC, Inc. was overstated by $8,000. What are the effects on the following accounts? Revenue [a] Expenses [b] Net Income [c] Assets [d] Liabilities [e] Equity [f] Overstated, Understated, or Correct

Revenue [Correct] Expenses [Understated] Net Income [Overstated] Assets [Overstated] Liabilities [Correct] Equity [Overstated]

Raider sold goods costing $35,000 to Texas Company FOB Shipping Point on September 1. The goods shipped on September 7. The goods arrived at Texas Company on September 15. Texas paid on September 20. Texas Company is responsible for the shipping charge. T or F

True

Raider sold goods costing $40,000 to Waco Company FOB Destination on september 30. The goods shipped on October 4. The goods were received by Waco Company on October 8. Waco paid on October 25. Raider is responsible for the shipping charge. T or F

True

The Frodo Co. offers their customers a reduction in price for early payment. Frodo would refer to this reduction in price as a: a. Sales discount. b. Sales allowance. c. Sales return. d. Quantity discount. e. Purchase allowance.

a. Sales discount.

An allowance method of accounting for bad debts expense: a. Will result in a contra asset account with a debit balance. b. Is the required method when the uncollectible amounts are expected to be material. c. Will increase the cost of goods sold. d. Can result in reporting higher accounts receivable. e. Is a suggested method for the financial report.

b. Is the required method when the uncollectible amounts are expected to be material

Gap, Inc. received a request from a customer to reduce the invoice price of goods because the goods were damaged in shipment. This type of request is recorded as credit to Accounts Receivable and a debit to: a. Cash b. Sales Returns and Allowances c. Retained Earnings d. Sales Discounts e. Sales Revenues

b. Sales Returns and Allowances

Mina Corp. has a policy of encouraging customers receiving goods that were in any way damaged in shipment to send them back to the company. Mina would refer to this type of transaction as a: a. Sales allowance. b. Sales return. c. Purchase discount. d. Purchase return. e. Sales discount.

b. Sales return.

Raider sold goods costing $35,000 to Texas Company FOB Shipping Point on September 1. The goods shipped on September 7. The goods arrived at Texas Company on September 15. Texas paid on September 20. When should Texas Company record the purchase? a. September 15th b. September 1st c. September 7th d. September 20th

c. September 7th

On Oct. 10, Red Raider Jewels sold merchandise costing $3,000 and accepted the customer's First Bank MasterCard. At the end of the day, the First Bank MasterCard receipts were deposited in the company's bank account. First Bank charges a 4% service fee for credit card sales. What journal entry is required? . a. Cash(D). 3,000 Credit Card Discount Expense(C) 120 Sales Revenue(C) 2,880 b. Cash(D) 3,000 Sales Discount Expense(C) 120 Sales Revenue(C) 2,880 c. Cash(D) 2,880 Sales Discount Expense (D) 120 Sales Revenue(C) 3,000 d. Cash(D) 2,880 Credit Card Discount Expense(D) 120 Sales Revenue(C) 3,000

d. Cash 2,880 Credit Card Discount Expense 120 Sales Revenue 3,000

On January 3rd, a customer returned $1,250 of merchandise that had been purchased with cash to Raider Supplies. Raider's cost of the goods returned was $350. Which journal entry or entries should Raider prepare? a. Cash (D) 1,250 Sales Refunds Payable(C) 1,250 Inventory returns estimated(D) 350 Inventory (C) 350 b. Sales Revenue(D) 900 Refund Expense(D) 350 Cash (C) 1,250 c. Sales Revenue(D) 1,250 Cash(C) 1,250 d. Sales Refunds Payable(D) 1,250 Cash(C) 1,250 Inventory(D) 350 Inventory returns estimated(C) 350

d. Sales Refunds Payable(D) 1,250 Cash(C) 1,250 Inventory(D) 350 Inventory returns estimated(C) 350

The Clooney Co. has an account called Sales Returns and Allowances with a balance of $24,058. What type of account is Sales Returns and Allowances and what is its normal balance? a. Contra-Asset, Debit balance. b. Asset, Debit balance. c. Revenue, Credit balance. d. Contra-Revenue, Debit balance. e. Contra-Revenue, Credit balance.

d. Contra-Revenue, Debit balance.

Raider sold goods costing $40,000 to Waco Company FOB Destination on September 30. The goods shipped on October 4. The goods were received by Waco Company on October 8. Waco paid on October 25. When should Raider recognize the revenue from the sale? a. October 25th b. October 4th c. September 30th d. October 8th

d. October 8th

Which of the following is TRUE about the accounting for bad debts? a. The Allowance for Doubtful Accounts normally has a debit balance. b. The direct-write-off method for bad debts is acceptable for financial reporting when material write-offs of accounts are expected. c. Bad debt expense is normally a contra-revenue account similar to Sales Discounts. d. The allowance method for bad debts is acceptable for financial reporting. e. Bad debt expense is a prepaid expense like Prepaid Rent.

d. The allowance method for bad debts is acceptable for financial reporting.

Which of the following accounts normally has a credit balance? a. Sales discounts. b. Sales returns. c. Transportation-in. d. Purchases. e. Allowance for uncollectible accounts (aka Allowance for doubtful accounts).

e. Allowance for uncollectible accounts (aka Allowance for doubtful accounts).

Which of the following accounts normally has a debit balance a. Retained Earnings b. Sales Revenues c. Purchase Returns and Allowances d. Purchase Discounts e. Sales Returns and Allowances

e. Sales Returns and Allowances

Which of the following statements is FALSE? a. Bad Debts expense is debited and Allowance for doubtful accounts is credited at the end of the period to recognize bad debts under the allowance method. b. Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial. c. An aging schedule typically categorizes the various accounts by the length of time each invoice is outstanding. d. Allowance for doubtful accounts is a contra account that is used to reduce accounts receivable to its net realizable value. e. The reason the allowance method of recognizing bad debts is used is primarily because it recognizes higher amount of Accounts receivable on the balance sheet than the direct method.

e. The reason the allowance method of recognizing bad debts is used is primarily because it recognizes higher amount of Accounts receivable on the balance sheet than the direct method.