Exam 2 practice answers

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Arizona State University *

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93923

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Accounting

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Apr 3, 2024

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Exam 2 Practice Test with — ounsusers Which of the following indicates that the shipment is free on board and the buyer pays all of the shipping and freight costs? &I | FOB shipping chntj O Cash on delivery O 2/10,n/30 (O FOB destination On December 1, Macy Company sold merchandise with a selling price of $9000 on account to Mrs. Jorgensen, with terms 4/10, n/30. On December 3, Mrs. Jorgensen retur merchandise with a selling price of $700. Mrs. Jorgensen paid the amount due on Pecember 9JWhat journal entry did Macy Company prepare on December 9 assuming the grgss method is used? 9000-700=$8,300, 8300-4%(0.04*8300=332)=7968, > withun 10 clouf? (O Debit Sales Revenue for $8300, credit Sales Discount for $332 and credit Cash for $7968. g, & [ Debit Cash for $7968, debit Sales Discounts for $332, and credit Accounts Receivable for $8300. (O Debit Sales Revenue for $7968, debit Sales Discounts for $332, and credit Accounts Receivable for $8300. (O Debit Cash for $7968 and credit Accounts Receivable for $7968.

The following account balances were extracted from the accounting records of Thomas Corporation at the end of the year: Accounts Receivable $1,105,00D (Credit) Allowance for Uncollectible Accounts $37,000 Uncollectible-Account Expense $60,000 What is the net realizable value of the accounts receivable? O $1,105.000 O $1,165.000 & \ $1,068.000 | O $1,142,000 NRV=z 1,105,000-37,000=1,068,000 GROSS A/R — Alowaenle. A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: IAccounts Est. Percent Days Outstanding |Receivable |Uncollectible 1-30 days — 1 ss5000 % 34 = /950 o300 31-60 days $45,000] ¢ sy = 2,250 Sum= 10,30 61-90 days $21.000] > 109 = 2,100 _ End bal Over 90 days $8000| x 5094 = 4-,000 AdhgsoNnte Before the year-end adjustment, the credit balance in Allowance for Uncollectible Accounts was $1300. Under the aging-of-receivables method, the Uncollectible-Account Expense at year-end is and the ending balance of The Uncollectible Account Expense is (O $1950,$3,500 R | $9000;$10,300 ———— (O $11,600,$1,300 (O $10,300. $11,600 | Beg-bl 1,300 Bl UW&\L) . q/m) acwt‘exp erd. bol (0, 300 ofe

If the interest rate on a note is 12.5% and the principal was $57,000, what is the maturity value of the note, if the term of the note is 5 months? (Round your final answer to the nearest dollar.) qu& - . + O $64,125 ot by volue = Prn " p tHs & \$59.969 sleust = 57,000X 12:52 x_,_'.; X &5 mon O $61.156 O $57,000 2,4 6815 YW 57,000+2,969=59,969 Excalibur Company has calculated the following ratios: Yeon2 Yeai | Ratio 12/31/2019]12/31/2018 » o e > Current Ratio 2.25 2.00 —> H‘W E W Quick Ratio 1.10 0.50 - % Lo Tler~ Collection Period 30 days 60days | Lowt ™ Hpe e ObUNE Did the company's|liquidity improve in 2019? ~ ALL Thee 7 Wﬂ O There is not enough information to assess. O No. @ [Yes, all the ratios improved. O There is conflicting information. Two ratios improved and one ratio declined. A company has $28,000 in cash and cash equivalents, $88,000 in short-term investments, $122,000 in net current receivables, $64,000 in inventory, $14,000 of prepaid insurance and $11,000 of supplies. The total current liabilities of the firm are $304,000. The quick ratio of the company is: (Round your final answer to two decimal places.) (O 108 28 000+ 88 00F 122,000 _ ~.18 O o03s. T 204,000 R ® [0 ] v/ Quick Ratio= Cash+Short-term investment+net recievables/current liabilities 30f 10

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Carlton Company purchases $8,000 of inventory with shipping terms,"lz)BEgr'tl_and. Carltonis based in Seattle and the supplier is based in Portland. The shipping @&ts are $450{What is the cost of Carlton's inventory? $8,450 $8,000 OO0OO0OR oh; 4 Foe portland f!’efa"g HER Shwhphng Eann - EEERTLT tronsfers as soon as shap wpped . Custormer %Q perd There is not enough information to calculate inventory cost. Either $8,000 or $8,450 is an acceptable amount to assign to inventory cost under GAAP. Archer Corp. has the following LIFO perpetual inventory records: Date Purchases |Cost of Goods Sold |Inventory on Hand December 1 $4,150 December 7 $1,500 $5,650 December 18 $1,200 $4,450 December 31 $1,400 $5.850 echd . Tnv - The current replacement cost of the ending inventory is $3,800. To apply the lower-of-cost-or- market rule, the journal entry would be: (O Debitinventory $1,200, credit Cost of Goods Sold $1,200 (O Debit Inventory $2,050, credit Cost of Goods Sold $2,050, & | Debit Cost of Goods Sold $2,050, credit Inventory $2,050, (O Debit Cost of Goods Sold $1,200, credit Inventory $1,200 erd. I pvent®o Cuarert Yep lacerent per books = 5_8s0 VO’VL"LQT .3,900 AO%WMM,Z—’E—S—?—-

Renoir Associates had the following inventory data: Date Quantity Unit Cost July 1 Beginning inventory 5 $55 July 4 Purchase 10 $53 Uuly 7 Sale 12 July 11 Purchase 9 $54 Uuly 14 Sale 8 Assuming FIFO, what is the cost of goods sold for the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) &‘J sl O sa24 Beg bal + puwrchad® — coas = O $432 5x5'5‘ 4 JoxsS3 (5;55‘+7x93)=3x53 429 ] L B Gapdloxss + ax oa — (x324 550 =05 O 3430 LL ~.§42ﬂ = Given the following inventory activity, what is ending inventory using the perpetual LIFO costing method? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) Date lQuantity Junit Cost Beginning Balance 110 $6.00 September 17 |Purchase 60 $1.50 September 24 |Sale 25 September 29 |Purchases 60 $5.00 (O 85units@ $6.00 and 60 units @ $1.50 and 60 units @ $5.00 (O 205units @ $4.58 (O 145 units @ $4.41 and 60 units @ $5.00 B l 110 units @ $6.00 and 35 units @ $1.50 and 60 units @ $5.00

A company has sales revenue of $133,000, cost of goods sold of $63,000, operating expenses of $37,000, and other expenses of $4000. The company's operating income is: O ® O O $66,000. __/’ﬂis’___ $33,000.] Sales 123, OOD) ‘ $29,000 - coas w o = eP oy 70,000. ’ 0 Op- AP (?l,ow) e 33 000 = ORerssr A company has sales revenue of $131,000, €65t of goods sold of $63,000, operating expenses of $34,000, and other expenses of $2000. The company's gross profit is: (V%) [$68,ooo. ] Tis O $32,000. Sales 131,080 O $66,000. _ coas (e3,002) O $34000. -G P 6800 = - ExP —:"Q,Efn_f 33 — OTher €xf£ Syrio's Snowboards uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $24,000 in the Inventory account. Actual inventory on hand per a physical count was $19,000. What action does the company now need to take? \ ’ m ROOO Debit Inventory and credit Cost of Goods Sold, $5,000. 1. MLl oy o book nven No action is required because the amount is not material. Pwsi el S0 Al on Debit Purchases and credit Cost of Goods Sold, $5,000. 5 AAJ s Hro %’R' Debit Cost of Goods Sold and credit Inventory, $5,000. coas 4_ — cASSR ' :ane,% - . 2 heeds 1o [ i;_. ; hentce cfi s Salieri Company purchased 80 keyboards on account for $15 each from Amadeus, Inc. When they unpacked the keyboards, Salieri found that 30 of the keyboards were damaged in shipping. What is the journal entry that Salieri will make to record the purchase return? = 450 @ I-Bebit Accounts Payable - Amadeus and credit Inventory, $450. 30x15 4 O O O - Debit Purchase Returns and credit Inventory, $1,200. Debit Purchase Returns and credit Inventory, $450. Debit Accounts Payable - Amadeus and credit Inventory, $1,200.

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e 28 Dali's Timepieces had the following inventory data: Date Quantity Unit Cost Uuly 1 Beginning inventory/ 5 $49 July 4 Purchase 10 $57 July 7 Sale 12 July 11 Purchase 9 $54 July 14 Sale 8 aPea Assuming average cost, what is the cost of goods sold for the July 7 sale? (Round any intermediary calculations to the nearest cent and round your final answer to the nearest dollar.) wt-ave cost = psx49+ (toxs1 (9""0’3' M +) &54—!0) coaS (g—vxﬂd‘l) = Bi-28% |2= 52 54.33 produces the lowest cost of goods sold and the highest gross profit when prices are decreasing. O Average Cost O FIFo (O Specific identification x [iro New technology, like the latest cell phones and HDTV, would probably be costed using the: O LIFO method of inventory costing. O moving average method of inventory costing. /@ Eny method as the physical flow and the cost flow are differenE] () FIFO method of inventory costing.

Gengler Company acquired three pieces of equipment for $1,700,000. Equipment #1 is appraised at $470,000, equipment #2 is appraised at $630,000 and equipment #3 is appraised for $640,000. The cost of equipment #1 is: (Do not round any intermediary calculations, and round your final\ answer to the nearest dollar.) ] - “ve four | YL@aJ-Ml@ B [onass| cost g et | s O 126954 manket “val ' 470, 00O ] X f___/——‘/m QO 470000 g, 0,00 [4—70)000 F 630,000+ 644, 129,9 A company incurred the following costs for a new delivery truck: Purchase price $110,000 Sales tax 7,000 Delivery charge from seller's location 1,600 Special racks for storage 3,000 Normal repairs to the truck before it was used for the first time 1,100 Signs painted on the truck 2,000 Insurance on truck before it was used for the first time 3,000 What is the cost of the delivery truck? 120,600 incarred befove o Larg S O E@ AL cosl'ts b M”—’:Fa« i O 123600 Apeet Is E——/Ui't?’ 5 aillbaee O 118600 Pust Uime ore aap Which of the following costs for a delivery vehicle should NOT be capitalized? O repair air conditioning system ® |all of the above Rep z _ shoudd e e nanel O repair dented fender Y29 wl : Waei , (O service air conditioning system