Accounting 1. Exam 2

A company that purchases inventory for $10,000 with terms 2/10 n/30. It then returns $2,000 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $100. The company pays the amount due within the discount period . What is the amount of discount that will be taken

$158

Bijoux Company has sales of $40,000, beginning inventory of $5,000, purchases of $25,000, and ending inventory of $7,000. The cost of good sold is:

$23,000

Ace Electronics uses a perpetual inventory system. On May 1, beginning inventory was $100,000. During May, Ace purchased $35,000 of inventory and sold $71,000 of inventory. After the store closed on May 31, employees counted the inventory in the store and found that $60,000 of inventory remained unsold. What was Ace's inventory shrinkage?

$4,000

Acme, Inc. had cost of goods sold of $2,000. If beginning was $2,100 and ending inventory was $500, Acme's purchases must have been $____

$400

Before reconciling to its bank statement, Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250. The bank reconciliation for the month contained the following items: DEPOSIT IN TRANSIT $750 OUTSTANDING CHECKS $465 INTEREST EARNED $ 20 NSF CHECK RETURNED TO BANK $100 BANK SERVICE CHARGE $ 10 Given the above information, what adjusted cash balance should Lauren report at month-end?

$5,160

The Tuck Shop began the current month with inventory costing $10,000, then purchased inventory at a cost of $35,000. The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000. If an inventory count shows that inventory costing $14,500 is actually on hand at month-end, what amount of shrinkage occurred during the month?

$500

Accounts Receivable $98,000 Unadjusted debit balance in Allowance for Doubtful Accounts 1,000 The company uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,800. What is the amount of Bad Debt Expense to be recorded for the year?

$6,800 (uncollectible + unadjusted)

Cary Inc. reported net credit sales of $300,000 for the current year. The unadjusted credit balance in its Allowance for Doubtful Accounts is $500. The company has experienced bad debt losses of 1% of credit sales in prior periods. Using the percentage of credit sales method, what amount should the company record as an estimate of Bad Debt Expense?

3000

Alphabet Company, which uses the periodic inventory method, purchases different letters for resale. Alphabet had no beginning inventory. It purchased A thru G in January at $4 per letter. In February, it purchased H thru L at $6 per letter. It purchased M thru R in March at $7 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year 2. Use the information above to answer the following question. If Alphabet Company uses the weighted average method, what is the cost of its ending inventory?

5.56*12= 67

Alphabet Company, which uses the periodic inventory method, purchases different letters for resale. Alphabet had no beginning inventory. It purchased A thru G in January at $4 per letter. In February, it purchased H thru L at $6 per letter. It purchased M thru R in March at $7 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year. 3. use the information above to answer the following question. If Alphabet Company uses the FIFO method, what is the cost of its ending inventory?

6*7+5*6+1*4= 76

alphabet company, which uses the periodic inventory method, purchases different letters for ... Question: Alphabet Company, which uses the periodic inventory method, purchases different letters for resal... Alphabet Company, which uses the periodic inventory method, purchases different letters for resale. Alphabet had no beginning inventory. It purchased A thru G in January at $4 per letter. In February, it purchased H thru L at $6 per letter. It purchased M thru R in March at $7 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year. 1. use the information above to answer the following question. If Alphabet Company uses the LIFO method, what is the cost of its ending inventory?

7*4+5*6= 58

Flynn Company's monthly bank statement showed the ending balance of cash of $18,500. The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,500, outstanding checks of $2,000, a NSF check of $700, bank service charges of $30 and the EFT from a customer in payment of the customer's account of $1,500. 1. what journal entry should be recorded by Flynn Company for the EFT?

?

Thompson Company updates its inventory records perpetually. The company's records showed a beginning inventory of $6,000; cost of goods sold of $1,400; and ending inventory of $800. How much inventory was purchased during the year?

?

A company using a perpetual inventor.. A company using a perpetual inventory system made the following entry: Debit Accounts Payable for $3,000, credit Inventory for $60, and credit Cash for $2,940. What does this entry reflect?

A payment within the discount period for inventory previously purchased on credit.

which of the following is the equation for cost of goods sold?

COGS = beginning inventory + purchases - ending inventory

Flynn Company's monthly bank statement showed the ending balance of cash of $18,500. The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,500, outstanding checks of $2,000, a NSF check of $700, bank service charges of $30 and the EFT from a customer in payment of the customer's account of $1,500. 2 .What journal entry should be recorded by Flynn Company for the NSF check returned?

Debit accounts receivable and credit cash for $700

Kata Company uses the allowance method. On May 1, Kata wrote off a $22,000 customer account balance when it becomes clear that the particular customer will never pay. The journal entry to record the write-off on May 1 would include which of the following?

Debit to Allowance for Doubtful Accounts and credit to Accounts Receivable

Assume a periodic inventory system is used. Which inventory costing method generally results in the most recent costs being assigned to ending inventory?

FIFO First-in, first-out (FIFO) assumes that the costs of the first goods purchased (first in) are the costs of the first goods sold (first out), so that generally results in the most recent costs being assigned to ending inventory.

The LIFO inventory costing method assumes that the cost of the units most recently purchased is the:

First to be assigned to cost of goods sold

Which of the following statements regarding inventory classifications is not true?

Inventory is classified as a long-term asset on the balance sheet.

Research has found that three factors exist when fraud occurs. Which of the following is not one of the three factors of the fraud triangle?

Lack of a code of ethics

Which of the following items will require an adjusting journal entry on a company's books

NSF Check

which of the following is not a primary goal of inventory management

Obtaining the lowest cost of inventory

Segregation of duties means that a company assigns responsibilities so that

Responsibilities for related activities are assigned to two or more people.

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

Sarbanes-Oxley Act

which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence

Sarbanes-Oxley Act (SOX)

When the allowance method is used, the entry to record the write-off of specific uncollectible accounts would decrease:

The Allowance for Doubtful Accounts account.

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

The use of cash count sheets?

An allowance for doubtful accounts is a contra-account that offsets:

accounts receivable

although there are some clear disadvantages associated with extending credit to customers, such as bad debt costs, most managers believe a particular advantage outweighs the cost. to which primary advantage do they refer?

additional sales revenue

Fraud is best defined as:

an attempt to deceive others for personal gain

Beginning inventory plus purchases minus ending inventory equals:

cost of good sold

The objectives of a company's system of internal control include all of the following except:

ensuring the company's stock price provides a reasonable return to investors.

The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an:

expense account and a credit to a contra-asset account.

Under the periodic inventory system:

inventory must be counted at the end of each accounting period ??

On the balance sheet, the Allowance for Doubtful Accounts

is subtracted from Accounts Receivable.

Which inventory system updates the inventory account only at the end of the accounting period?

periodic

Which of the following would be considered merchandise inventory?

purchased finished goods

countryside Corporation provides $6,000 worth of lawn care on account during the month. Experience suggests that about 2% of net credit sales will not be collected. In conformity with the expense recognition principle, the company should:

record an estimate of Bad Debt Expense in the same period as the lawn care is provided.

Sales Revenue reports the:

selling price times the quantity of goods sold

which line item would be found on a service firms income sheet and not on a merchandisers

service revenue

Inventory shipped FOB shipping point and in transit on the last day of the year should be included in:

the inventory balance of the buyer

a company buys footwear and clothing from manufacturer, which it resells to discount stores

wholesale merchandising company