ACC 210 EXAM 2

Which of the following is considered a cash equivalent for financial reporting purposes?

checks from received customers

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

nonexistent; that is, there is no such accounting requirement.

FIFO or LISH first in first out, last in still here

oldest inventory

LIFO or FISH last in first out, first in still here

newest inventory

A company purchased inventory as follows: 200 units at $6.00 300 units at $6.60 The weighted average unit cost for inventory is

$6.36.

A company collects a customer's accounts receivable balance within the discount period. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues.

(1) Decrease, (2) Decrease, (3) Decrease

The following information is related to December 31, 2021balances. • Accounts receivable $3,150,000 • Allowance for doubtful accounts (credit) (270,000) • Net realizable value $2,880,000 During 2022 sales on account were $870,000 and collections on account were $516,000. Also during 2022 the company wrote off $48,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that $324,000 of receivables will be uncollectible. Bad debt expense for 2022 is

102,000

Karlin Company gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per book, 4/30 $17,600 Deposits in transit 2,400 Notes receivable and interest collected by bank 5,920 Bank charge for check printing 200 Outstanding checks 12,000 NSF check 1,120 The adjusted cash balance per books on April 30 is

22,200

The interest on a $15,000, 6%, three-month note receivable is

225

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: Accounts receivable $ 3,200,000 Allowance for doubtful accounts per books before adjustment (credit) 200,000 Total estimated uncollectible accounts at December 31 260,000 What is the net realizable value of the accounts receivable at December 31 after adjustment?

260,000

In reviewing the accounts receivable, the net realizable value is $28,000 before the write-off of a $2,000 account. What is the net realizable value after the write-off?

28,000 - because we reduce both the A/R and the AFDA account

Farwell Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what is the implied annual interest rate (rate of return) inherent in the credit terms?

36%

weighted average cost

COGS/ # of units for sale

Young Company lends Dobson Industries $40,000 on August 1, 2022, accepting a 9-month, 9% interest note. If Young accrued interest at its December 31, 2022 year-end, what entry must it make to record the collection of the note and interest at its maturity date?

Cash 42,700 Notes Receivable 40,000 Interest Receivable 1,500 Interest Revenue 1,200

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

Which of the following bank reconciliation items would not result in an adjusting entry?

Notes collected by the bank

Which of the following would be added to the balance per books on a bank reconciliation?

Notes collected by the bank.

Which of the following would be subtracted from the balance per bank on a bank reconciliation?

Outstanding checks

Which of the following activities is not a component of the operating cycle?

Payment of employees' salaries

Which of the following is not an internal control activity for cash?

The functions of record keeping and maintaining custody of cash should be combined.

Under a perpetual inventory system

accounting records continuously disclose the amount of inventory

Which of the following would reduce net sales revenue recognized by a company that sells inventory to customers? a. Sales returns b. Sales discounts c. Sales allowances d. Anticipated sales returns on previously recorded sales of products

all of the above

All of the following are examples of internal control procedures except

customer satisfaction surveys.

Tony's Market recorded the following events involving a recent purchase of inventory: Purchased goods for $100,000 on account, terms 2/10, n/30. Returned $2,000 of the shipment for credit. Paid $500 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's inventory balance

increased by $96,540

FOB destination point

title passes at the destination - still belongs to supplier until physically delivered

FOB shipping point

title passes when it leaves the warehouse - still belongs to buyer