AC200 Exam pt2

High Ridge Merchandising Co. purchased inventory that had a list price of $10000. The purchase was made under terms 2/10, net 30 FOB shipping point. Freight costs amounted to $300. Assuming High Ridge paid cash for the inventory within 5 days, the cost of inventory was:

$10,000 list price + $300 freight cost =$10,300 !0,000*2%=$200 $10,300 - $200 $10,100 cost of inventory

X. Co paid $2000 cash to purchase inventory. This inventory was sold for $3,000 net cash

$1000/$1000

Rosewood Company made a loan of $12000 to one of the company's employees on April 1, Year 1. The one year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1?

$12,000 * 6% = $720 $720 * 9months(April-Dec)/12 = $540

*see photo The amount of total assets December 31, 2017 balance sheet would be

$15,100

The Dalen Company paid $3500 for a one-year insurance policy on July 1. 2015. The amount of expense shown on the income statement and the amount Prepaid Insurance shown on the Balance Sheet at the end of 2015 would be:

$1750/$1750

On September 1, 2012 Legal Services Associates (LSA) collected $1800 in exchange for an agreement to provide services for a period of one year beginning immediately. On December 31, 2012 balance sheet LSA would report liabilities of:

$1800 - $600 revenue = $1200

On September 1, 2012 Legal Services Associates (LSA) collected $1800 in exchange for an agreement to provide services for a period of one year beginning immediately. On its 2012 income statement, LSA would report revenue of:

$1800 / 12 months in a year = $150 $150 per month * 4 months (Sept-Dec.) = $600

Total Liabilities (see #6 photo)

$250 accounts payable $1000 notes payable $500 unearned revenue Total Liab. = $1750

*see photo Assuming a LIFO cost flow, the amount of ending inventory reported on the balance sheet would be

$370

*see photo Assuming a weighted average cost flow, the amount of ending inventory reported on the balance sheet would be (round to nearest dollar)

$392

*see photo The amount of net income reported on the December 31, 2017 income statement would be

$4,700

*see photo The amount of cash flow from operating activities for 2017 would be

$4,800

*see photo Assuming a FIFO cost flow, the amount of gross margin reported on the income statement would be

$405

ABC Company purchased two inventory items. The first cost $50 and the second cost $60. One of the items was sold for $75. Assuming ABC uses weighted average, the amount of cost of goods sold reported on the income statement would be:

$60 + $50 = $110/2 = $55 $75 - $55 = $20

ABC Company uses the allowance method to account for bad debts. Which of the following reflects how the estimate of bad debt expense affects ABC's financial statements?

*see photo - assets n/a liab. - equity n/a revenue + expenses - net income n/a cash flow

Garnet Co. had beginning inventory of $300 and ending inventory of $200. Garnet Co. had cost of goods sold amounting to $1,600. Based on this information, Garnet Co. must have purchased inventory amount to:

Beginning inventory - Ending inventory $300 - $200 = $100 Cost of goods sold - Inventory $1600 - $100 = $1500

ABC Company purchased two inventory items. The first cost $50 and the second cost $60. One of the items was sold for $75. Assuming ABC uses FIFO cost flow, the amount of cost of goods sold reported on the income statement would be:

FIFO = $60

Writing inventory down to the lower of cost or market will?

Increase expenses

Company purchased supplies for $8500 on account on January 31, 2006

Increase supplies and accounts payable by $8500

Lowest gross margin?

LIFO

ABC Company purchased two inventory items. The first cost $50 and the second cost $60. One of the items was sold for $75. Assuming ABC uses a LIFO cost flow, the amount of cost of goods sold reported on the income statement would be:

LIFO = $60

Which is true regarding FIFO under perpetual inventory system?

Multiply units in ending inventory by the last costs in inventory

Echo Company started the year with a $3600 balance in accounts receivable and a $300 balance in the allowance for doubtful accounts. The company had sales account of $20,000, collections on accounts receivable of $19,000, and wrote off uncollectible accounts of $200 during the year. The company believer that 3 percent of its credit sales will be uncollectible. Based on this information, the net income would be

Revenue = $20,000 3% uncollectible $20,000 * 3% = $600 $20,000 - $600 =$19,400

On January 31, 2012, Allison Company wrote off an uncollectible account of $8500. The allowance method is used. The write off would cause total assets to:

Would not affect assets

What does not appear in operating activities?

cash inflow from earned revenue

Cash flow from operating activities

cash interest on a note receivable

Receiving cash advance payment for future services (unearned revenue)

increase asset increase liabilities

When a company recognizes cost of goods sold (ignore effects of sales revenue)

net income decreases

What does not appear on income statement?

prepaid rent

True statement about assets

total amount of assets are not affected