ACCT 1010 Proctored Exam Two Ch 5-10

The entry to replenish a petty cash fund includes a credit to

Cash

Five thousand bonds with a face value of $1,000 each, are sold at 97. The entry to record the issuance is

Cash 4,850,000 Discount on Bonds Payable 150,000 Bonds Payable 5,000,000

Five thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is

Cash 5,100,000 Premium on Bonds Payable 100,000 Bonds Payable 5,000,000

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. The entry made by Sadowski Brick Company on January 1 to record the proceeds and issuance of the note is

Cash 500,000 Notes Payable 500,000

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

Cash 600,000 Unearned Subscription Revenue 600,000

Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit(s) to

Cash for $38,400 and Service Charge Expense for $1,600.

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Hardware store

The declining-balance method of depreciation produces a(n)

decreasing depreciation expense each period

The primary difference between a periodic and perpetual inventory system is that a periodic system

determines the inventory on hand only at the end of the accounting period.

Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: Units Per Unit Price Total Balance, 1/1/2017 300 $5.00 $1,500 Purchase, 1/15/2017 150 5.30 795 Purchase, 1/28.2017 150 5.50 825 At the end of the month (1.21.2017) inventory showed that 240 units were on hand. If the company uses LIFO,what is the value of the ending inventory?

$1,200

Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: Units Per Unit Price Total Balance, 1/1/2017 300 $5.00 $1,500 Purchase, 1/15/2017 150 5.30 795 Purchase, 1/28.2017 150 5.50 825 At the end of the month (1.21.2017) inventory showed that 240 units were on hand. If the company uses FIFO,what is the value of the ending inventory?

$1,302

Danford Trucking purchased a tractor trailer for $147,000. Danford uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life. Salvage value is estimated to be $21,000. If the truck is driven 80,000 miles in its first year, how much depreciation expense should Danford record?

$10,080

Higgins Company gathered the following reconciling information in preparing its October bank reconciliation: Cash balance per books, 10/31 $16,800 Deposits in transit 600 Notes receivable and interest collected by bank 3,400 Bank charge for check printing 80 Outstanding checks 8,000 NSF check 680 The adjusted cash balance per books on October 31 is

$19,440

Olympus Climbers Company has the following inventory data: July 1 Beginning inventory 30 units @ $19 $ 570 July 7 Purchases 105 units @ $20 2,100 July 22 Purchases 15 units @ $22 330 Total $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is:

$2,010

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows: 600 units at $7 900 units at $8 The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. The value of Heineken's inventory at May 31,201 is

$2,250

Foyle Company purchased a new van for floral deliveries on January 1, 2017. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2017?

$22,400

The interest on a $15,000, 6%, 90-day note receivable is

$225

Givens Retail purchased land for a new parking lot for $125,000. The paving cost $175,000 and the lights to illuminate the new parking area cost $60,000. Which of the following statements is true with respect to these additions?

$235,000 should be debited to Land Improvements.

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 credit before adjustment, what is the amount of bad debt expense for that period?

$39,000

A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at

$410,000

The maturity value of a $60,000, 9%, 40-day note receivable dated July 3 is

$60,600

A company purchased factory equipment on April 1, 2017, for $128,000. It is estimated that the equipment will have a $16,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2017, is

$8,400.

Financial information is presented below: Operating expenses $45,000 Sales Returns and Allowances 3,000 Sales discounts 7,000 Sales Revenue 160,000 Cost of Goods Sold 96,000 The profit margin would be:

.06

During 2017, Ronald Corporation reported net sales of $2,000,000, net income of $900,000, and depreciation expense of $100,000. Ronald also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Ronald's asset turnover is

1.6 times

Laser Listening has the following inventory data: Nov 1 Inventory 30 units @ $6.00 each 8 Purchase 120 units @ $6.45 each 17 Purchase 60 units @ $6.30 each 25 Purchase 90 units @ $6.60 each A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assuming that the specific identification method is used and that ending inventory consists of 30 units from each of the three purchases and 10 units from the November 1 inventory, cost of goods sold is

1286

Quiet Phones Company has the following inventory data: July 1 Beginning inventory 30 units @ $19 $570 7 Purchases 105 units @ $20 2,100 22 Purchases 15 units @ $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is

2070

A company shows the following balances: Sales Revenue $800,000 Sales Returns and Allowances 75,000 Sales Discounts 25,000 Cost of Goods Sold 490,000 What is the gross profit rate?

30%

Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: Product Cost Market A $114,000 $120,000 B 80,000 76,000 C 160,000 162,000 If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be

350,000

The following information was available for Bowyer Company at December 31, 2017; beginning inventory $90,000; ending inventory $70,000; cost of goods sold $800,000; and sales $1,100,000. Bowyer's days in inventory in 2017 was

36.5 days

Use the following information regarding Black Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2017 (to the closest decimal place)?" Year Inventory Turnover Ending Inventory Black Company 2015 $26,340 2016 8.7 29,890 2017 8.4 30,100

43.5 days

Use the following information regarding Red Company to answer the question "Which amount is equal to Red Company's "days in inventory" for 2016 (to the closest decimal place)?" Year Inventory Turnover Ending Inventory Red Company 2015 $25,860 2016 7.0 24,750 2017 7.5 22,530

52.1 days

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows: 600 units @ $7 900 units @ $8 The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of Mayis

6,750

The following information was available for Camara Company at December 31, 2017: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $630,000; and sales $900,000. Camara's inventory turnover in 2017 was

6.3 times

Windsor Corporation sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 6. What is its average collection period (days)?

61

Leary Corporation had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $120,000 and at the end of the year was $180,000. What was the accounts receivable turnover?

8.0

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

A bank service charge

For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation?

A returned $300 check recorded by the bank as $30

The journal entry to record a credit sale ignoring cost of goods sold is

Accounts Receivable Sales Revenue

When is a physical inventory usually taken?

At the end of the company's fiscal year

Many companies use just-in-time inventory methods. Which of the following is not an advantage of this method.

Companies may not have quantities to meet customer demand.

Which of the following is not a basic principle of cash management?

Maintain idle cash.

Gipson Furniture factors $700,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?

Dr. Cash 679,000 Dr. Service Chg Expense 21,000 Cr. Accts Receivable 700,000

Which of the following would not be included in the Equipment account?

Electricity used by the machine.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Inventory

If a purchaser using a perpetual inventory system pays the transportation costs, then the

Inventory account is increased

What is the advantage of using the multiple-step income statement?

It highlights the components of net income

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

LIFO method

West County Bank agrees to lend Drake Builders Company $400,000 on January 1. Drake Builders Company signs a $400,000, 6%, 6-month note. What entry will Drake Builders Company make to pay off the note and interest at maturity assuming that interest has been accrued to June 30?

Notes Payable 400,000 Interest Payable 12,000 Cash 412,000

Interest expense would be classified on a multiple-step income statement under the heading

Other expenses and losses

Which one of the following items would not be considered cash?

Postdated checks.

An asset that cannot be sold individually in the market place is

goodwill

Under a perpetual inventory system

accounting records continuously disclose the amount of inventory

Cost allocation of an intangible asset is referred to as

amortization

An overstatement of ending inventory in one period results in

an understatement of net income of the next period.

An overstatement of the beginning inventory results in

an understatement of net income.

The current portion of long-term debt should

be reclassified as a current liability

The entry to record the receipt of payment within the discount period on a sales of $900 with terms of 2/10. n/30 will include a

credit to Accounts Receivable for $900

A $100 petty cash fund has cash of $16 and receipts of $86. The journal entry to replenish the account would include

credit to Cash Over and Short for $2.

A company receives $264, of which $24 is for sales tax. The journal entry to record the sale would include a

credit to Sales Taxes Payable for $24

The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $120,000 FICA taxes withheld 9,180 Income taxes withheld 25,000 Medical insurance deductions 4,500 Federal unemployment taxes 320 State unemployment taxes 2,160 The journal entry to record the monthly payroll on April 30 would include a

debit to Salaries and Wages Expense for $120,000

You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

debit Allowance for Doubtful Accounts and credit Accounts Receivable.

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

debit Cost of Goods Sold and credit Inventory

An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,400 credit balance, the adjustment to record bad debts for the period will require a

debit to Bad Debt Expense for $6,600.

The entry to record the return of goods from a customer would include a

debit to Sales Returns and Allowances

The reconciliation of the cash register tape with the cash in the register is an example of

independent internal verification.

The direct write-off method of accounting for uncollectible accounts

is not generally accepted as a basis for estimating bad debts.

The factor which determines whether or not goods should be included in a physical count of inventory is

legal title

After gross profit is calculated, operating expenses are deducted to determine

net income

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.

Gross profit equals the difference between

sales revenue and cost of goods sold

Inventory becomes goods sold when a company

sells the inventory

Liquidity ratios measure a company's

short-term debt paying ability

If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

subtract $72 from the book's balance

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

systematic and rational manner.

A current liability is a debt that can reasonably be expected to be paid

within one year, or the operating cycle, whichever is longer.