Reference no: EM131605365

1. A credit sale of $750 is made on June 13, terms 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 20 is:
a. $700
b. $650
c. $685
d. $686

2. To record the sale of goods for cash in a perpetual inventory system:
a. two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.
b. only one journal entry is necessary to record cost of goods sold and reduction of inventory.
c. two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue.
d. only one journal entry is necessary to record the receipt of cash and the sales revenue.

3. If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is:
a. $330,000
b. $390,000
c. $370,000
d. $420,000

4. Which of the following is not part of the journal entries made when merchandise is sold on credit?
a. Credit the Merchandise Inventory account
b. Credit the Sales account
c. Credit the Cost of Goods Sold account.Credit the Cost of Goods Sold account
d. Debit the Accounts Receivable account

5. FOB shipping point means that the
a. common carrier pays the freight.
b. goods are placed free on board to the buyer's place of business.goods are placed free on board to the buyer's place of business.
c. buyer pays the freight.
d. seller pays the freight.

6. Villa Sales Company had the following amounts related to its business: Beginning Inventory, $12,000; Purchases, $42,000; Net Sales, $50,000; and Gross Profit, $15,000. The amount of the ending inventory is
a. $54,000
b. $77,000
c. $19,000
d. $35,000

7. On November 2, Griffey Company has cash sales of $4,200 from merchandise having a cost of $3,000. The entries to record the day's cash sales will include:
a. a $3,000 credit to Cost of Goods Sold.
b. a $4,200 credit to Cash.
c. a $3,000 credit to Merchandise Inventory.
d. a $4,200 debit to Accounts Receivable.

8. Songbird Company has sales of $150,000 and cost of goods available for sale of $135,000. If the gross profit rate is 30%, the estimated cost of the ending inventory under the gross profit method is:
a. $15,000
b. $30,000
c. $90,000
d. $105,000

9. There was no beginning inventory. During July, James Company made the following purchases -July 3rd 20 units @ $12, July 11th 20 units @$13, July 20th 10 units @ $15. They made the following sales - July 13th 25 units and July 22nd 10 units. Under the perpetual FIFO method, the cost of goods sold is:
a. $470
b. $180
c. $435
d. $215

10. There was no beginning inventory. During July, James Company made the following purchases -July 3rd 20 units @ $12, July 11th 20 units @$13, July 20th 10 units @ $15. They made the following sales - July 13th 25 units and July 22nd 10 units. Under the perpetual LIFO method, the ending inventory is:
a. $470
b. $180
c. $435
d. $215

11. There was no beginning inventory. During July, James Company made the following purchases -July 3rd 20 units @ $12, July 11th 20 units @$13, July 20th 10 units @ $15. They made the following sales - July 13th 25 units and July 22nd 10 units. Under the perpetual average cost method, the per unit value of ending inventory is:
a. $202.50
b. $13.33
c. $13.50
d. $12.50

12. Two common subsidiary ledgers are:
a. accounts payable and cash payments.
b. accounts receivable and cash receipts.
c. accounts receivable and accounts payable.
d. sales and cost of goods sold.

13. At the beginning of the month, the accounts receivable subsidiary ledger showed balances for Apple Company $5,000 and Berry Company $7,000. During the month, credit sales were made to Apple $6,000, Berry $4,500, and Cantaloupe $8,500. Cash was collected on account from Berry $11,500 and Cantaloupe $3,000. At the end of the month, the control account Accounts Receivable in the general ledger should have a balance of:
a. $12,000
b. $31,000
c. $16,500
d. $11,000

14. A purchase of inventory on account is recorded in the:
a. cash payments journal.
b. purchase journal.
c. general journal.
d. cash receipts journal.

15. A company writes a check to replenish a $100 petty cash fund when the fund contains receipts of $94 and $3 in cash. In recording the check, the company should:
a. credit Cash for $94.
b. credit Petty Cash for $3.
c. debit Petty Cash for $94.
d. debit Cash Over and Short for $3.

16. Dewitt Company gathered the following information in preparing its bank reconciliation on May 31: Cash Balance per the Books, May 31, $3,500; Deposits-In-Transit, $1,150; Note and Interest Collected by the Bank, $850; Bank Service Charge, $20; Outstanding Checks, $2,500; NSF check, $170. The adjusted cash balance per the books at May 31 is
a. $2,460.
b. $3,010.
c. $4,160.
d. $5,510.

17. Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on the review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is
a. $55,000.
b. $65,000.
c. $60,000.
d. $5,000.

18. Net sales for the month are $800,000, and bad debts are expected to be 1.5% of net sales. The company uses the percentage-of -sales basis. If the Allowance for Doubtful Accounts has a credit balance of $15,000 before adjustment, what is the balance after adjustment?
a. $23,000
b. $27,000
c. $15,000
d. $12,000

19. In 2012, Roso Carlson Company had net credit sales of $750,000. On January 1, 2012, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2012, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2012?
a. $40,500
b. $10,050
c. $10,500
d. $22,500

20. Sanders Company has a debit balance of $7,000 in its Allowance for Doubtful Accounts before any adjustments are made. Based on a review of its accounts receivable at the end of the year, Sanders estimates that $70,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is:
a. $63,000
b. $70,000
c. $77,000
d. $7,000

21. On May 1, Kingston Company received a $6,000, 10%, four-month note receivable. The cash to be received by Kingston Company when the note becomes due is
a. $6,200.
b. $6,600.
c. $200.
d. $6,000.

22. Maggie Sharrer Company borrows $88,500 on September 1, 2012, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2012?
a. $10,620
b. $2,655
c. $3,540
d. $4,425

23. Andy Manion earns $14 per hour for a 40-hour week and $21 per hour for any overtime work. If Manion works 45 hours in a week, gross earnings are
a. $650.
b. $630.
c. $665.
d. $560.

24. John Jansen, an employee of Redwood Company, had gross earnings for the month of May of $4,000. FICA taxes are 8% of gross earnings (all earnings are subject), federal income taxes amount to $675 for the month, state income taxes are 3% of gross earnings, and Jansen authorized voluntary deductions of $5 per month to the United Way. What is the net pay for John Jansen?
a. $3,680
b. $2,880
c. $2,885
d. $3,205

25. McCann Company sells 4,000 units of its product for $500 each. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $75 per unit. In the year of sale, warranty contracts are honored on 80 units for a total cost of $6,000. What amount will be reported in McCann's balance sheet as Estimated Warranty Liability at December 31?
a. $3,000
b. $0
c. $6,000
d. $9,000