D103
What is consigned inventory?
Goods that are shipped, but title remains with the consignor
Product costs are costs that "attach" to what?
Inventory
What is considered cash?
Money market checking accounts
Accounts receivable turnover ratio is calculated by dividing net sales by average what?
Net accounts receivable (subtract allowance each for year)
The moving average method means changing the average cost each time what happens?
New inventory is purchased
Is direct write generally seen as appropriate?
No
Is restricted cash segregated from cash on the income statement?
No
What is the end of period entry for the inventory account for a company under the perpetual inventory system?
No entry necessary
When payments are made at the end of a period, is it an ordinary annuity or annuity due?
Ordinary annuity
To find the present value of interest, calculate the periodic interest and solve for what?
PV
Average days to collect receivables is 365 divided by what?
Receivable turnover ratio
If, as anticipated, the FASB eliminates the cash equivalent classification, how will a treasury bill will be classified?
A temporary investment
Under direct write off, what account is used?
Bad debt
Net realizable value of accounts receivable is equal to what?
Balance in accounts receivable less percentage estimated to be not collected
Bank overdrafts should be under which section on the balance sheet?
Current liabilities
What is the entry to record the payment of invoices for $4,000 within the discount period under the gross method?
DR A/P $4,000 CR Purchase Discounts $80 CR Cash $3920
What is the entry to record the payment of invoices for $6,000 after the discount period under the net method?
DR A/P $5880 DR Purchase Discounts Lost $120 CR $6000
What is the entry to record the payment of invoices for $6,000 after the discount period under the gross method?
DR A/P $6000 CR Cash $6000
What is the entry to record the payment of invoices for $4,000 within the discount period under the net method?
DR A/P 3920 CR Cash $3920
Under the periodic inventory system, a company sells 600 units at $12 each. What does the entry look like?
DR A/R $7200 CR Sales Rev $7200
Under the perpetual inventory system, a company sells 600 units at $12 each. What does the first entry look like?
DR A/R $7200 CR Sales Rev $7200
assume that the financial vice president of Brown Furniture authorizes a write-off of the $1,000 balance owed by Randall Co. on March 1, 2021. The entry to record the write-off is:
DR Allowance for Doubtful accounts $1,000, CR A/R $1,000
Brown Furniture in 2020, its first year of operations, has credit sales of $1,800,000. Of this amount, $150,000 remains uncollected at December 31. The credit manager estimates that $10,000 of these sales will be uncollectible. The adjusting entry to record the estimated uncollectibles (assuming a zero balance in the allowance account) is:
DR Bad Debt Expense $10,000, CR Allowance for Doubtful accounts
Under the perpetual inventory system, a company sells 600 units at $12 each. What does the second entry look like?
DR COGS $3600 (600*$6) CR Inventory $3600
Morgan records receipt of the annual interest and amortization of the discount for the first year as follows (amounts per amortization schedule).
DR Cash, DR Discounts, CR Interest Rev
Under the perpetual inventory system, a company purchases 900 units of inventory at $6 each. What does this entry look like?
DR Inventory $5400 CR Accounts Payable $5400
What is the end of period entry for the inventory account for a company under the periodic inventory system?
DR Inventory (ending) $2400 DR COGS $3600 CR Purchases $5400 CR Inventory (beginning) $600
Oasis Development Co. sold a corner lot to Rusty Pelican as a restaurant site. Oasis accepted in exchange a five-year note having a maturity value of $35,247 and no stated interest rate. The land originally cost Oasis $14,000. At the date of sale, the land had a fair value of $20,000. Given the criterion above, Oasis uses the fair value of the land, $20,000, as the present value of the note. Oasis therefore records the sale as:
DR N/R $35,247 CR Discounts on N/R $15,247 CR Land $14,000 CR Gain on disposal of land $6,000
What is the entry to record a company's purchase of goods for $10,000 with the terms 2/10, net 30 under the gross method?
DR Purchases $10,000 CR A/P $10,000
Under the periodic inventory system, a company purchases 900 units of inventory at $6 each. What does this entry look like?
DR Purchases $5400 CR A/P $5400
What is the entry to record a company's purchase of goods for $10,000 with the terms 2/10, net 30 under the net method?
DR Purchases $9800 CR A/P $9800
Hanley Company sells goods for $10,000 to Murdoch Inc. with terms 2/10, net 30, and Hanley expects that the discount will be taken. How is the sale recorded under the gross method?
Debit A/R $10,000, Credit Sales $10,000
Hanley Company sells goods for $10,000 to Murdoch Inc. with terms 2/10, net 30, and Hanley expects that the discount will be taken. How is the sale recorded under the net method?
Debit A/R 9800, Credit Sales Rev $9800
Hanley Company sells goods for $10,000 to Murdoch Inc. with terms 2/10, net 30, and Hanley expects that the discount will be taken. How is the collection recorded under the gross method if they use the discount?
Debit Cash $9800, Debit Sales Discount $200, Credit A/R $10,000
On January 16, 2020, Max grants an allowance of $300 to Oliver because some of the hurricane glass is defective. What does this entry look like?
Debit Sales Returns, Credit A/R
On January 31, 2020, before preparing financial statements, Max estimates that an additional $100 in sales returns and allowances will result from the sale to Oliver on January 4, 2020. What does this entry look like?
Debit Sales Returns, Credit Allowance for Sales Returns
Hanley Company sells goods for $10,000 to Murdoch Inc. with terms 2/10, net 30, and Hanley expects that the discount will be taken. How will the payment of the accounts receivable be recorded if they don't take the discount under the net method?
Debit cash $10,000, Credit A/R $9800, Credit Sales Discount Forfeited $200
A company sold goods in exchange for a $5,000, two-year zero-interest-bearing note. The note is issued to a high-risk customer and the market rate for a note of similar risk is 7%. Assuming an annual interest rate of 7% for two years is appropriate, the present value of the principal is $5,000 × 0.87344 = $4.367.Which journal entry is recorded at the time of sale?
Debit notes receivable for $5,000; credit revenue for $4,367; credit discount on notes receivable for $633
On December 10, under direct write off, Cruz Co. writes off as uncollectible Yusado's $8,000 balance. The entry is:
Debt Bad Debt $8,000, CR A/R $8,000
Companies record and report long-term notes receivable at the present value of the cash they what?
Expect to collect
If there's already a balance in the bad debt expense account, what do you do to the amount you'll add to it?
Subtract the balance from the amount you'll add. I.E. Balance of $800 and you want to add $1,000. You only have to add $200
The amount recorded for the sale is equal to what?
The Present Value of the asset
Period costs are costs that are indirectly related to what?
The acquisition or production of goods
F.O.B. shipping point means ownership transfers when the goods reach what?
The common carrier agent
FO.B. destination means ownership transfers when the goods reach what?
The company buying the goods
A company receives a four-year, $50,000 zero-interest-bearing note in exchange for a piece of equipment. The market rate at the date of receipt is 6%.Which statement is true regarding the initial recording of the note?
The discount on notes receivable account will be credited.
the carrying amount of a note is equal to what?
The face value of the note
When calculating COGS with LIFO, start from where?
The purchase most close to the sale
When calculating COGS with FIFO, start from where?
The top, or most recent purchases
To find the average cost, find the total cost of the goods available in inventory, and divide it by what?
Total units in inventory
Which items should be included in a company's inventory at the balance sheet date?
Which items should be included in a company's inventory at the balance sheet date?
Are commercial papers cash equivalents?
Yes
Are money market funds cash equivalents?
Yes
Are treasury bills cash equivalents?
Yes
Can restricted cash be segregated if it's material?
Yes
