accounting ch 4 5 6 7

on november 1, a medical company provides services to a customer of $15,000. the customer is unable to back the moeny immediately, and signs a 12% promissory note on November 1st. what journal entry will the medical company make on december 31st to recognize revenue earned ?

$15,000/6 months = 2500/month x .12 = 300 interest receivable 300 interest revenue 300

equipment was purchased for $50,000. The equipment is expected to be used 15,000 hours over its useful life and then have a residual value of $10,000. In the first two years of operation, the equipment was used 2,700 hours and 3,300 hours, respectively. What is the equipment's accumulated depreciation at the end of the second year using the activity-based method?

$16,000

a company purchased land and building from a seller for $900,000. a separate appraisal revels the fair value of the land to be $200,000 and the fair value of the building to be $800,000. for what amount would the company record land at the time of purchase ?

$180,000

at the beginning of the year, Johnson Supply has inventory of $5,200. during the year, the company purchases an additional $20,000 of inventory. an inventory count at the end of the year reveals remaining inventory of $3,000. what amount will Bennett report for cost of goods sold?

$22,200

Kenzo purchased equipment for $60,000 0n january 1, 2021 . the enterprises is ecpected to have a 5 year service life with a residua value on $5,000 at the end of 5 years using the double declining balance method, depreciaion expense for 2021 would be

$24,000

the balance sheet of Hawk Pizza reprots total assets of $3,000,000 and $3,400,000 at the beginning and end of the year, respectively. net income and sales for the year are $480,00- and $4,000,000 respectively what is their return on asset

$24,000

Madison Outlet has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $ 6,500 Jan. 1 - Dec. 31 Total sales to customers 12 what amount would madison report for ending inventory using weighted average cost?

$3,380

Madison Outlet has the following inventory transactions for the year Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200 $2,000 Mar. 14 Purchase 15 300 4,500 $ 6,500 Jan. 1 - Dec. 31 Total sales to customers 12 what amount would madison report for cost of goods sold using LIFO?

$3,600

Madison Outlet has the following inventory transactions for the year: Date Transaction Numbers of Units Unit Cost Total cost Jan. 1 Beginning inventory 10 $200 $ 2,000 Mar. 14 Purchase 15 300 4,500 $ 6,500 Jan. 1 - Dec. 31 Total sales to customers 12

$3,900

a company purchased land(50,000), a building(350,000) and equipment(100,000) for 1 price of $400,000.

$40,000

Kenzo Enterprises purchased equipment for $30,000 on January 1, 2012 . the equipment is expenced to have a 5 year service life with residual value of $2,500 at the end of 5 years using straight line , depreciation expanse would be

$5,500

on october 1, a franchise was purchased for $2 million. the franchise agreement is 10 years, what is the amount of amortization expense by the end of the first year, December 31(using partial year straight line amortization )

$50,000

the cheese cake factory incurred the following costs related to aquiring a new piece of equipment Cost of the equipment $ 50,000 Sales tax (8%) 4,000 Shipping 3,000 Installation 2,000 Depreciation during the first month 1,000 Total costs $ 60,000 what is the total recorded cost of the equipment

$59,000

on April 1, 20xx, nelson inc. accepts a $100,000, 8% note. the note receivable and interest are due on March 31, 20xx (one year later). On December 31, 20xx, nelsen will accrue interest revenue of :

$6,000

Equipment was purchased for $50,000. At that time, the equipment was expected to be used eight years and have a residual value of $10,000. The company uses straight-line depreciation. At the beginning of the third year, the company changed its estimated useful life to a total of six years (four years remaining) and the residual value to $8,000. What is depreciation expense in the third year?

$8,000

what is net revenues service revenue - $100,000 Sales discounts - $2,00 Accounts receivable - $15,000 sales allowances - $7,000 cash - $18,000

$91,000

schmidt company's accounts receivable balance is $100,000, its adjusted balance in allowance for uncollectible accounts is $4,000, and its bad debt expanse is $3,800. the net amount of accounts receivable is :

$96,000

the balance sheet of hawk pizza reports total assets of $3 million and $3.4 million at the beginning and end of the year, respectively. net income and sales for the year are $480,000 and $4 million respectively whats their ASSET turnover

1.25 times

the balance sheet of hawk pizza reports total assets of $3 million and $3.4 million at the beginning and end of the year, respectively. net income and sales for the year are $480,000 and $4 million respectively whats their profit margin

12%

the balance sheet of hawk pizza reprots total assets of 3 million and 3.4 million at the enginnignand end of year respectively . net income and sales for the year are $480,000 and 4 million , respecivelt what is hawk pizzas return on assrts

15%

for the year, Sealy Inc reports net sales of $50,000, cost of goods sold of $40,000, and an average inventory balance of $5,000. what is sealy's gross profit ratio

20%

a company has net sales of $200,000 , cost of goods sold of $120,000 , selling ecpenses of $6,000 and non operating expences of $2000 . what is the companys gross profit ratio

200,000 - 120,000 _____________________________ 80,000

the allowance for uncollectible accounts for a company has a credit balance of $8 million for the year, and the balance of accounts receivable at the end of the year is $40 million . what are the accounts receivable

32 million $ what you should receive - what you wont receive ___________________________________ what you will receive

refer to hat would this compans average collection period be

365/ 7.19 = 50.76

average collection period equation

365/ receivables turnover ratio

if avg turnover ration is 11, what is their average days inventory ration

365/11 = 33

at the beginning of 2021, clay ventures has a total accounts receivable of $100,000. by the end of 2021, clay reports net credit sales of $900,000 and total accounts receivable of $200,000. what is the receivables turnover ratio for clay adventures ?

6.0

a company has a profit margin of 10% and reports net sales of $ 4 million and average assets of $5 million. calculate the companys return on assets

8.0%

a company has net sales of $120,000, selling expences of $6,000 and non operating expences of $2,000 . what is the company's operating income ?

80,000 - 6,000 _________________________ 74,000

company A has receivables turnover ration of 5.3 comany bs ha 4.7 compute average collection period for each company and state which more effectively collects cash from customers

A =365/5.3 = 68.86 B = 365/ 77.66 company A is more effective

which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs?

FIFO

which cost flow assumption must be used for financial reporting if it is also used for tax reporting

LIFO

during a period of rising proces , which inventoy cash flow addumption would resuly in highest cost of goods sold and thereby lowest net income

LIFO cogs high net income low

what key piece of legislation was passed in response to corporate accounting scandals by Enron world com and others ?

Sarbanes- Oxley Act

which of the following best describes a merchandising company ?

a company that purchases products that are primarily in finished form for resale to customers

accumulated depreciation is what kind of accoutn

a contra asset

when $2,000 of accounts receivable are determines to be uncollectible, which of the following should the company record to write off the accounts ising the allowance method

a debit to allowance for uncollectible accounts and credit to accounts receivable

record the estimate for uncollectible accounts includes:

a debit to bad debt expense

what describes what the receivables turnover ratio tells us?

a measure of a companys ability to collect cash from customers

the effect of writing off a specific account receivable is :

a reduction in the allowance for uncollectible accounts

the same company above returns $2,500 worth of the inventory the following week , before paying for any of it. what is the journal entry for the return ?

accoints payable 2,500 inventory 2,500

the company pays the $47500 he owes for inventory but receives a 5% discount . record the journal entry

accounts payable 47,500 cash 45,125 inveentoey 2375

when a company provides services on account, which of the following accounts is debited?

accounts receivable

a company has sales on account of $40 million for the current year. make journal entry.

accounts receivable $40 million sales revenue $40 million

brian owes 20,000 , but notifies the company that they will be unabelto pay the money they owe becuase his comapy went bankrupt , journal entry

accowance for uncollectivel acounts 20,000 accounts receivable 20,000

over the entire service life of an asset, which depreciation method records the highest total depreciation

all the methods result in the same total depreciation

what represents the journal entry for writing off a customers accounts receivable values at $1000

allowance for uncollectibel accounts $1000 / accounts receivable $1000

whic hof the folowing properly escives what FIFO method tells us

assums first units purchased are first ones sold

a company has sales on account for $40 million. if they estimate that 25% of these sales will not be collected, what journal entry will they make

bad debt exp $10,000,000 allowance for uncollectibel accountrs $10,000,000

company estimates 30% of this 40,000,000 wont be collected. make journal entry

bad debt expense 12 million allowance for uncollectible accounts million

under the allowance method, allowance for uncolleftible accounts increases (credited) when

bad debts are estimated

cost of goods sold equals

beginning inventory + net purchases - ending inventory

cost of goods sold

beginning inventory + purchases - ending inventory

the assets cost less accumulated depreciation is called:

book value

the customer from the previous question pays after 8 days. what journal entry will the company record after receiving cash? (now they paid. now they get the discount)

cash 196 sales discount 4 accounts receivable 200

when you take beginning inventory and add purchases and subtract ending inventory, you are calculating ?

cost of goods sold

which of the following is defines as the cost of inventory sold

cost of goods sols

a long term asset is recorded at the

cost of the asset plus all costs necessary to the asset for use

a company provies a service to one of its customers for $200 offering terms 2/10, n/30. what transaction will the company make when they make when they provide the service given that is was completed on account (didnt pay yet)

debit accounts receivable credit service revenue

a company has the following aging schedule of its accounts receivable with the estimated percent uncollectible: not due yet - $175,000 0-60 days past due - $40,000 61-120 past - $10,000 more than 120 days past due - $5000 assuming the balance for uncollectible accounts is $3,000 (credit) before adjustment, which of the following would be recorded in the year end adjusting entry?

debit bad debt expense for $14,000

on January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. which of the following would be recorded when the customer remits payment on January 25?

debit sales discount for $10

using the allowance method, the entry to record a write off of accounts receivable will include

debit to allowance for uncollectible accounts

using a perpetual inventory system, the purchase of inventory on account is recorded with a

debit to inventory

which of the following correctly describes the nature of depreciation

depreciation represents the allocation of the cost of property plant and equipment over its service life

which depreciation method generally will result in the greatest amount of depreciation in the first 5 year of the assets life?

double declining balance

which of the following depreciation methods typically results in the highest depreciation expense during the first year of an assets life

double declining balance method

research and development costs should be :

expensed in the period incurred

for merchandising companies, you will see raw materials , work in progress, and finished good inventory accounts in the balance sheet true or false

false

sales allowances are when a customer returns a product and get moeny back true or false

false this is when they are unsatisfied with product/service and they get a discount

the LIFO method results in high ending inventory than FIFO true or false

fasle FIFO high ending enventory

under the allowance method for uncollectible accounts, the balance of allowance for uncollectible accounts increases when :

future bad debts are estimated

which of the following intangible assets are not amortized

goodwill

which of the following is true concerning goodwill

goodwill is recorded when a company is purchased for more than the fair value of its identifiable net assets

operating income

gross profir - selling expences

gross profit ratio

gross profit / net sales

how does one find gross profit

gross profit =net revenues - cost of goods sold

eagle corporation has net slaes on 1 million . they also have cost of goods sold of $440,000. what would eagle corporaton fross profit ratio be

gross profit ration = gross profit /net sales 560,000/1million = .56

which of the following is true reguarding LIFO and FIFO

in a period of rising costs, LIFO results in lower net income than FIFO

a companys plants to minimize theft and enhance the accuracy of accounting information are refered to as

internal controls

Fan Company purchases inventory on account. The entry to record this purchase using a perpetual inventory system would include a debit to:

inventory

which of the following are defined as items a compay intends for ale to customers in the normal course of busines

inventory

using the perpetual system, how you journaize purchasing inventory for %50,000 on account

inventory 50,000 accoutns payable 50,000

eagle corporation has beginning inventory of $30,000 and ending inventoyu of $50,000. their net sales for the year were $1 million and cost of goods sold 4440,000. calculate their inventory turnover ratio.

inventory turnover ratio = COGS/avg inventory 440,000/40,000 = 11

inventory is defined as:

items a company intends for sale to customers

the 3 elements of the fraud triangle are

motivation , rationalization , opportunity

if a company uses the allowance method of accounting for uncollectible accounts and writes off a specific account:

net accounts receivable do not change

return on assets

net income/average total assets

receivables turnover ratio

net sales / average accounts receivable

company has net sales of $50,000. its beginning balance of accounts receivalbe was 6.800 and ending balance was 7,100 what is the receivables turnover ration for this company

net sales / avg a/r 50,000 / 6950 = 7.19

what effect will writing off a customers accounts receivale have on balance sheet

no effect

a company accounts for possible bad debts using the allowance method. when an actual bad debt occurs, what effect does it have on the accounting equation

no effect on the accouting equation

which level of profitibility is considered profit from normal operations ?

operating income

an exclusice 20 year right to manufacture a product or to use a process is a :

patent

which of the following transactions would result in an account receivable?

providing services to customers on account

which of the following is not recorded as an intangible asset in the balance sheet

research and development

which of the following refers to the seller reducing the customers balance owed because of some deficiency in the company's product or service

sales allowance

when customers pruchase goods on account, sprint manufactiging offers them a 2% reduction in the amount owed if they pay within 10 days, this is an example of

sales discount

gross profit

sales revenue - COGs

gross profit is defined as:

sales revenue - cost of goods sold

when do merchandising and manufacturing companies record their revenue

sell inventory to customers

a multiple step income statement provides the advantage of :

separating revenues and expenses based on their different types of activities

what does gross profit measure

the amount by which the sale price of interior exceeds its cost per dollar of sales aka how much you actually make

under a perpetual inventory system

the cost of goods sold is recorded with each sale

which of the following represents the balance of cost of goods sold at the end of the year ?

the cost of inventory sold during the year

the receivables turnover ratio is a measure of :

the number of times during a year that the average accounts receivable balance is collected

a company's inventory turnover ratio measures

the number of times the company sells its average inventory balance during the year

average cost method

total cost / # of units 3

net revenue equation

total revenues - sales return - sales allowance - sales discount

which of the following is not subtracted from total revenues in order to find net revenues a. sales discount b. sales allowance c. sales revenue d. trade discount

trade discount

bad debt ecpense will be found in the income statement true or falase

true