Acct 2300 Exam 3

Tanya Company has the following information: AR Jan 1: $220,000 AR Dec 31: $430,000 Credit Sales: $1,810,000 Cash sales: $1,040,000 Write-offs of uncollectible accounts: $!5,000 What are collections from customers on account during the current year?

$1,585,000

Sanfran Company purchased inventory for $100,000. In addition they had purchase returns of $6000 and paid freight-in of $12,000. Sanfran Company's net cost of purchases would be:

$106,000

Given the following data, what is cost of goods sold as determined by the FIFO method? Sales: 280 units Beg Inv: 250 units at $7 per unit Purchases: 88 units at $9 per unit

$1840

The follwoing account balances were extracted from the accounting records of Thomas Corporation at the end of the year AR: $1,104,000 AUA: $39,000 BDE: $60,000 What is NRV of the accounts receivable

$1,065,000

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

The Red Raider 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 $31,200 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $41,000. Services provided during September on account $57,000. During the month collections on account were $50,200 and accounts written off as bad debts were $3,000. At year-end, the company ages its receivables to the following aging schedule: Age of Accounts ARCurent PeriodPrevious Period $35,000$26,000$9,000 Estimated % Uncollectible 5%50% What is the September 30th net realizable value of Accounts Receivable?

29200

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts receivable: $34,800 (Dr.) Allowance for Doubtful Accounts: $220 (Cr.) Juan, Inc. estimates that 3% of accounts receivable will default (not pay). The net realizable value of Accounts Receivable on the Balance Sheet will be:

33756

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].

615000

Summertime had the following data for the month of March: Beg Inv March 1: 296 units at $20 per unit March 19 purchase: 234 units at $23 per unit March 27 purchase: 198 units at $29 per unit On March 31, 310 units are still on hand. Determine the cost of goods sold for March if Summertime uses the FIFO method.

8726

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 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: Use the following abbreviations for accounts to fill in the blanks. CA = Cash NR = Notes Receivable AP = Accounts Payable IR = Interest Revenue IREC = Interest Receivable UR = Unearned Revenue A Debit to [a] and a Credit to [b] for $[c].

A debit to IREC and a Credit to IR for $30

How do purchase returns and allowances and purchase discounts affect gross purchases

Both are subtracted from purchases

Thelen's inventory records show the following data at January 31: Beg Inv: 80 units at $7 per unit Jan 10 Purchase: 280 units at $10 per unit Jan 22 Purchase: 130 units at $11 per hand At January 31, 230 units are still on hand. What is the cost of the ending inventory at January 31 if Thelen uses the LIFO method?

$2060

Lennon company signed a 12-month, $50,000, 10% note on June 1, 2019. The amount of interest to be accured on December 31, 2019 is

$2917

At year end, a company's aging of accounts receivable indicates that the amount of uncollectible accounts is $3610. The allowance for uncollectible accounts prior to adjustment has a credit balance of $600. The accounts reveivable balance is $44620. The amount of the adjusting entry to incur Bad Debt Expense should be for:

$3010

The balance in AR at the beginning of the year was $600,000. The balance in AR at the end of the year was $700,000. Customer accounts of $440,000 were written off. The company collected $4,050,000 from credit customers and $1,060,000 from cash customers. What are credit sales from the year?

$4,590,000

Boston company sells thirty items for $1000 per unit and has a cost of goods sold per unit of $800. The gross profit to be reported for selling 30 items is

$6000

Given the following data, calculate the cost of goods sold using the average-cost method. Round average cost per unit calculations to two decimal places. round answer to nearest dollar 1/1 Beg Inv: 40 units at $20 per unit 5/10 Purchase of inv: 20 units at $10 per unit 10/9 Purchase of inv: 20 units at $12 per unit 12/31 ending inv: 28 units

$806

Sandy Company has the following information: Beg Inv: 150000 Net Purchases: 420000 Net sales: 810000 Gross Profit Percentage: 40% Sandy Company's estimated ending inventory is

$84,000

A year ebd review of Accounts Recievable and estimated uncollectible percentages revealed the following 1-30 days: $61,000 3% 31-60 days: $44,000 4% 61-90 days: $21,000 12% Over 90 days: $5000 50% Before the year end adjustment, the credit balance in Allowance for uncollectible accounts was $800 Under the aging-of-recievables method, the balance in the allowance for uncollectible accounts will be ______ after the adjusting entry is made:

$8610

A six month 10% note for $9000, dated April 15, is recieved from a customer. The maturity value of the note is

$9450

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?

1000

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts receivable: $34,800 (Dr.) Allowance for Doubtful Accounts: $220 (Cr.) Juan, Inc. estimates that 3% of accounts receivable will default (not pay). What is the ending balance in the Allowance for Uncollectible Accounts?

1044

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

A company has a beginning inventory of $50,000 and purchases during the year of $140,000. The begining inventory consisted of 2000 units and 8000 units were purchased during the year. The company has 3000 units left at year-end. Under average cost, what is cost of goods sold?

133,000

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? Do not use the dollar sign or a decimal in your answer.

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. The Walking Dead estimates that 8% of accounts receivable will default (not pay). Do not use the dollar sign or a decimal in your answer. Commas are ok. What is the September 30th balance in Allowance for Uncollectible Accounts?

2480

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: Units Price Amount January 1 2016 Inventory 1,000 $6.00 $ 6,000 March 8, 2016 purchase 2,000 $7.00 14,000 August 17, 2016 purchase 3,000 $8.00 24,000 Total 6,000 $44,000 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.

28000

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 that 8% of accounts receivable will default (not pay). Do not use the dollar sign or a decimal in your answer. Commas are ok. What is the September 30th net realizable value of Accounts Receivable?

28520

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

42000

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 Red Raider 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 $31,200 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $41,000. Services provided during September on account $57,000. During the month collections on account were $50,200 and accounts written off as bad debts were $3,000. At year-end, the company ages its receivables to the following aging schedule: Age of AccountsARCurent PeriodPrevious Period$35,000$26,000$9,000Estimated % Uncollectible5%50% What amount will Red Raider report as Bad Debt Expense on the Income Statement?

4400

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].

515000

The Red Raider 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 $31,200 Allowance for Doubtful Accounts on September 1st is $4,400. Services provided during September for cash $41,000. Services provided during September on account $57,000. During the month collections on account were $50,200 and accounts written off as bad debts were $3,000. At year-end, the company ages its receivables to the following aging schedule: Age of AccountsARCurent PeriodPrevious Period$35,000$26,000$9,000Estimated % Uncollectible5%50% What is the ending balance in the Allowance for Uncollectible Accounts?

5800

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

7500

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 that 8% of accounts receivable will default (not pay). Do not use the dollar sign or a decimal in your answer. Commas are ok. The dollar amount for the bad debt adjustment will be

80

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts receivable: $34,800 (Dr.) Allowance for Doubtful Accounts: $220 (Cr.) Juan, Inc. estimates that 3% of accounts receivable will default (not pay). What amount will Juan report as Bad Debt Expense on the income statement?

824

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?

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

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. Contra-Revenue, Credit balance. c. Asset, Debit balance. d. Contra-Revenue, Debit balance. e. Revenue, Credit balance.

Contra-Revenue, Debit balance.

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: Use the following abbreviations for account names: CA = Cash AR = Accounts Receivable ADA = Allowance for Doubtful Accounts BD = Bad Debt Expense SR = Sales Revenue Debit [a] and Credit [b].

Debit AUA Credit AR

Mariah Company has inventory at the end of the year with a historical cost of $74,000. Mariah company uses the perpetual inventory system. Under the LCM rule, the current replacement cost is $73,600 Under US GAAP, the journal entry to record the write down to LCM will:

Debit COGS for $400 and credit inventory for $400

On Dec 1, Macy Company sold merchandise with a selling price of $10,000 on account to Mrs. Jorgsen, with terms 5/10 n/30. On Dec 3, Mrs. Jorgsen returned merchandise with a selling price of $800. Mrs. Jorgsen pais the amount due on Dec 9. What journal entry did Macy Company prepare on Dec 9 assuming the gross method is used.

Debit cash for $8740 debit sales discount for $460 credit accounts receivable for $9200

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 interest recievable and credit interest revenue

A company uses the allowance method to recognize bad debts from its customers. The entry required to recognize the bad debt expense 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]

Decrease, decrease

When comparing the results of LIFO and FIFO when inventory costs are decreasing:

Ending inventory will be higher using LIFO

Which of the following is NOT used to determine the cost of net purchases?

Freight-out

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?

Inventory 1,500 COGS 1,500

An allowance method of accounting for bad debts expense:

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

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, NC, NC

Ending inventory for the year ended December 31, 2019, is understated by $20,000. How will this error affect net income for 2020?

Net income will be overstated by $20,000

What amount does a company expect to collect from Accounts receivable?

Net realizable value of accounts receivable of accounts receivable gross amount of accounts receivable minus allowance for uncollectible accounts

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?

Sales Refunds Payable 1,250 Cash 1,250 Inventory 350 Inventory returns estimated 350

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 return. d. Purchase discount. e. Sales discount.

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?

September 7th

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

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

In 2019, ending inventory is overstated. What is the effect of the error on total stockholders equity in 2019 and 2020?

Total stockholders equity is overstated in 2019 and correctly stated at the end of 2020.

Gross profit will be the Highest if FIFO is used and inventory costs are increasing highest if LIFO is used and inventory costs are decreasing Lowest if LIFO is used and inventory costs are increasing all of the above

all of the above

The net realizable value of accounts receivable is the difference between gross accounts receivable and

allowance for uncollectible accounts

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

allowance for uncollectible accounts

The allowance method records bad debt expense:

at the end of the accounting period in the year of sale following the matching principle

AN error in the ending inventory for the year ended December 31, 2019:

automatically creates errors in cost of goods sold in the 2019 and 2020 financial statements

Which of the following statements is FALSE? a. Allowance for doubtful accounts is a contra account that is used to reduce accounts receivable to its net realizable value. b. 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. c. 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. d. 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. e. An aging schedule typically categorizes the various accounts by the length of time each invoice is outstanding.

c. 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.

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)

correct, understated, overstated, overstated, correct, overstated

Juan, Inc. had the following balances in accounts for the year ending December 31st: Accounts Receivable: $34,8000 (Dr.) Allowance for Doubtful Accounts: $220 (Cr.) Juan, Inc. estimates that 3% of accounts receivable will default (not pay). The journal entry on December 31st to record bad debt expense for the year would be....

debit bad debt expense credit aua

In 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]

fifo, lifo, fifo, 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]

lifo, fifo, lifo, lifo

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?

october 8th

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

sales discount

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:

sales returns and allowances

When journalizing for the estimated sales return, there would be a debit to

sales returns and allowances

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

sales returns and allowances

Under the allowance method for estimating uncollectible accounts:

the AUA is a contra account to gross AR the AUA will normally have a credit balance a company sets up and AUA to estimate the amount of the receivables the company does not expect to collect

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/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/f

true