Midterm practice quizzes

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company returned $275 worth of merchandise and then paid the invoice within the 2% cash discount period. The total cost of this merchandise is:

$4000.50

January 1 Purchased 10 units at $4.00 per unit January 9 Sold 6 units at $12.00 per unit January 17 Purchased 8 units at $5.50 per unit January 27 Sold 7 units at $12.00 per unit Using the Periodic weighted average method, what is the value of cost of goods sold? (Round weighted average cost per unit to 2 decimal places.)

$61

A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 each. 12 units are sold on February 5. Using the periodic FIFO inventory method, what is the cost of the 12 units that are sold?

124

Raleigh Co. has the following products in its ending inventory. Compute the lower of cost or market total for inventory applied separately to each product. Product Quantity Cost per unit Market per unit Jelly 150 $ 2.00 2.15 Jam 370 $ 2.65 2.50 Marmalade 260 $ 3.10 3.05

2,018

November 1: Beginning inventory 100 units @ $20 November 5: Purchased 100 units @ $22 November 8: Purchased 50 units @ $23 November 16: Sold 200 units @ $45 November 19: Purchased 50 units @ $25 Using the weighted-average inventory method, the company's ending inventory would be:

2,200

January 1 150 units were purchased at $9 per unit. January 17 120 units were sold. January 20 160 units were purchased at $11 per unit. January 29 150 units were sold. What is the value of cost of goods sold?

2,750

Beginning inventory totals $100,000 and ending inventory totals $140,000. Net sales totals $400,000 and cost of goods sold is $300,000. What is the inventory turnover ratio?

2.50

A company has net sales of $752,000 and cost of goods sold of $543,000. Its net income is $17,530. The company's gross margin and operating expenses, respectively, are:

209,000 & 191,470

The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

23,400

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

2900

The supplies account has a balance of $975 at the beginning of the year and was debited during the year for $2,700, representing the total of supplies purchased during the year. If $700 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year would be:

2975

Beginning inventory 10 units @ $101 per unit First purchase 30 units @ $105 per unit First sale 20 units Second purchase 35 units @ $115 per unit Second sale 35 units Third purchase 16 units @ $120 per unit What is the total value of the ending inventory using a periodic inventory system with the weighted average costing method?

3,998.16

At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The sole stockholder's total investment in exchange for common stock for this first month was $5,000. There were no dividends in the first month. Calculate the amount of total equity to be reported on the balance sheet at the end of the month.

30,000

The total assets and the total liabilities of a corporation at the beginning and the end of the year are found below. During the year, the corporation paid $24,000 in dividends and stockholders made additional investments of $15,000 in the corporation. Assets - Beginning of the year $395,000 Assets - End of the year $555,000 Liabilities - Beginning of the year $190,000 Liabilities - End of the year $320,000 From the above information determine Net Income for the current year.

39,000

Larry Bar opened a frame shop and completed these transactions: 1. Larry started the shop by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock. 2. Purchased $70 of office supplies on credit. 3. Paid $1,200 cash for the receptionist's salary. 4. Sold a custom frame service and collected $1,500 cash on the sale. 5. Completed framing services and billed the client $200. What was the balance of the cash account after these transactions were posted?

40,300

Beginning inventory 10 units @ $10 per unit First purchase 35 units @ $11 per unit First sale 20 units Second purchase 40 units @ $12 per unit Second sale 35 units Third purchase 15 units @ $13 per unit What is the value of the ending inventory using a periodic inventory system with the LIFO costing method?

485

At the beginning of January of the current year, Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

49,700

Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000, credit terms 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.

52,000

Beginning inventory 10 units @ $10 per unit First purchase 35 units @ $11 per unit First sale 20 units Second purchase 40 units @ $12 per unit Second sale 35 units Third purchase 15 units @ $13 per unit Five units of the beginning inventory, 10 units of the first purchase, 15 units of the second purchase, and 15 units of the third purchase were not sold. What is the value of the ending inventory using a periodic inventory system with the specific identification method?

535

Beginning inventory 10 units @ $10 per unit First purchase 35 units @ $11 per unit First sale 20 units Second purchase 40 units @ $12 per unit Second sale 35 units Third purchase 15 units @ $13 per unit What is the value of cost of goods sold using a periodic inventory system with the FIFO costing method?

605

Beginning inventory totals $100,000 and ending inventory totals $140,000. Net sales totals $800,000 and cost of goods sold is $600,000. What is the days' sales in inventory (to the nearest hundredth)?

85.17

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?

Add $45 to the book balance.

The bookkeeper recorded a bank deposit at $450, but the bank recorded the deposit at its correct amount of $540. How will this error be treated on the bank reconciliation?

Addition per book balance of cash

What is the proper treatment on the bank reconciliation of a note collected by the bank for the depositor?

Addition per book balance of cash

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. Assuming the company uses the gross method to record purchases, the journal entry to record the cash paid on July 8 is:

Debit Accounts Payable, $1,600; Credit Merchandise Inventory, $32; Credit Cash, $1,568.

A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $3,000, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end?

Debit Accounts Receivable, $3,000; credit Roofing Fees Revenue, $3,000.

What is the proper journal entry to adjust the cash account for a check deemed NSF by the bank?

Debit Accounts Receivable; Credit Cash

High Step Shoes had annual revenues of $185,000, expenses of $103,700, and dividends of $18,000 during the current year. The retained earnings account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Debit Income Summary $81,300, credit Retained earnings $81,300

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, The correct journal entry to record the purchase on July 5 is:

Debit Merchandise Inventory $1,800; credit Accounts Payable $1,800.

Albany Co., which uses a perpetual inventory system, has a $400 petty cash fund. At the end of the first month, the accumulated receipts represent $60 for delivery expenses, $140 for incoming freight charges, $90 for entertainment expense, and $20 for miscellaneous expenses. The fund has a balance of $105. The journal entry to record the reimbursement of the account is:

Debit Merchandise Inventory, $140; Debit Delivery Expense, $60; Debit Entertainment Expense, $90; Debit Miscellaneous Expenses, $20; Credit Cash, $295; Credit Cash Over and Short, $15.

Spencer Co. decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system. The journal entry to record establishing the account is:

Debit Petty Cash $200 and credit Cash $200.

To establish a petty cash fund for a department requires a journal entry that will do which of the following?

Debit Petty Cash and credit Cash

Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,700 in dividends during the current year. The entry to close the dividends account at the end of the year is:

Debit Retained earnings $5,700 credit Dividends $5,700

Willow Rentals purchased $800 of office supplies on credit. Which of the following general journal entries will Willow Rentals make to record this transaction?

Debit office supplies $800 Credit accounts payable $800

a credit entry:

Decreases asset and expense accounts and increases liability, common stock and revenue accounts

The bookkeeper recorded a check at $340.56 for store supplies. The bank recorded the check at its correct amount of $430.65. How will this error be treated on the bank reconciliation?

Deduction per book balance of cash

What is the proper treatment on the bank reconciliation of a debit memorandum issued by the bank?

Deduction per book balance of cash

If the buyer is to pay the transportation costs of delivering merchandise, delivery terms are stated as:

FOB shipping point

Which of the following statements is correct concerning goods in transit?

Goods in transit that are being shipped FOB destination should be included in the sellers inventory count

Four financial statement are usually prepared for a business. The statement of cash flows is usually prepared last. The Statement of Retained Earnings (R), The Balance Sheet (B) and the Income Statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

I, R, B

Which of the following statements is true concerning the effects of inventory methods?

LIFO assigns the highest amount to cost of goods sold during times of rising prices, yielding the lowest net income

Inventory at the end of the current period was erroneously understated. Which of the following is true as a result of the error?

Net income at the end of the following year will be overstated

Which of the following items would not be an adjustment to the book balance of cash on a bank reconciliation?

Outstanding checks

Which of the following is not a principle of internal control?

Record-keeping and custody should be combined

In order to close the Dividends account, the

Retained Earnings account should be debited

How should goods being held on consignment be treated in inventory counts?

The consignor must report these items in its inventory until sold.

If the petty cash fund is not replenished at the end of the accounting reporting period, which of the following will occur?

The income statement and the balance sheet will not be correct

Which of the following would require the Petty Cash account to be credited?

The petty cash account is being decreased

At the end of the day, the cashier: (1) counts the money in the cash drawer, (2) compares the cash count with the recorded sales for the day, and (3) makes notations of differences on a special report that is forwarded, along with the cash, to the accounting department. This procedure is which of the following?

Unacceptable practice, not following internal control principles

Which of the following events would cause a bank to debit a depositor's account?

Which of the following events would cause a bank to debit a depositor's account?

Outstanding checks refer to checks that have been:

Written, recorded on the company books, sent to the payee, but not yet paid by the bank.

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

administrative expense

ending retained earnings=

beginning retained earnings + net income - dividends

The difference between the cost of a fixed asset account and the related accumulated depreciation account is termed:

book value

Multiple-step income statements show:

both gross profit and income from operations

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

cash 1500 accounts receivable 1500

The understatement of the ending inventory balance causes:

cost of goods sold to be overstate and net income to be understated

cash given is

credit

Silver Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery expenses, $127 for merchandise inventory, and $12 for miscellaneous expenses. The fund has a balance of $18. The journal entry to record the reimbursement of the account includes a:

credit to cash for $182

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a:

credit to merchandise inventory

ABC Co. leased a portion of its store to another company for eight months beginning on October 1, 2004 at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year-end on December 31, 2004 would include:

credit to rent earned for 2400

a credit is used to record and INCREASE in all of the following accounts except: A. account payable B. service revenue C. unearned revenue d. wages expense e. common stock

d

Costs included in the Merchandise Inventory account can include all of the following except:

damaged inventory that cannot be sold

Cash received is

debit

we debit/credit a payable to show we have paid it

debit

On December 1, Milton Company borrowed $300,000, at 8% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?

debit Interest Expense, $2,000; credit Interest Payable, $2,000

Samuel Sorenson, the sole stockholder, contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business, SS Consulting. Which of the following general journal entries will SS Consulting make to record this transaction?

debit cash $70,000 debit land $130,000 credit common stock $200,000

In recording the cost of inventory sold for cash for a company using the perpetual inventory method the journal entry is:

debit cost of goods sold credit merchandise inventory

the adjusting entry to record the depreciation of a equipment for the fiscal period is:

debit depreciation expense credit accumulated depreciation

The balance in the prepaid rent account before adjustment at the end of the year is $15,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is:

debit rent expense 5000 credit prepaid rent 5000

A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is:

debit salary expense 16000 credit salaries payable 16000

Using a perpetual inventory system, the entry to record a customer's return of merchandise sold on account includes a:

debit to merchandise inventory

On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

debit to unearned fees credit to fees earned for 1000

paid a dividend

decrease assets decrease equity

paid rent for the current month

decrease equity decrease assets

Paid creditor on account for supplies bought and charged last month

decrease liabilities decrease assets

dvidends

equity account that closes into retained earnings; only shows up on the statement of retained earnings

retained earnings

equity account that shows up on the balance sheet

The difference between sales and cost of goods sold for a merchandising business is:

gross profit

Closing entries are made

in order to transfer net income (or loss) and dividends to the retained earnings account

Adjusting entries affect at least one:

income statement account and one balance sheet account

Received cash on account from a customer for services provided last month

increase and decrease assets

purchased a truck on account

increase assets increase liabilities

received cash for services

increase equity increase assets

Received cash from stockholders as an investment in the company

increase equity increase assets

A company failed to record salaries expense incurred, yet not paid, for the last two days of the week. Omission of this adjusting entry will cause. . .

liabilities to be understated

Adjusting entries are:

needed to bring accounts up to date and match revenue and expense

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

net income will be overstated

If beginning retained earnings is $85,000, and ending retained earnings is $65,000, and the corporation paid dividends of $15,000, the amount of net income or net loss was:

net loss 5000

Sales less sales discounts, less sales returns and allowances equals:

net sales

A post-closing trial balance will show

only balance sheet accounts

The process of copying journal information to update ledger account balances is:

posting

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?

salary expense for the year was understated

the revenue account used in merchandising entities is:

sales

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

single-step income statement

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

supplies, overstated 130 fees earned, overstated 130

The balance in the Income Summary account before it is closed will be equal to

the net income or loss on the income statement

A summary of the ledger that lists the accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(an):

trial balance

Using accrual accounting, revenue is recorded and reported only:

when the services are rendered without regard to when cash is received

Does a sales account have a normal credit balance?

yes