Finacial Acct. Final Review part 2

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krobosu
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189066
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Finacial Acct. Final Review part 2
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2012-12-12 14:54:05
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Part final Review
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Part 2 Final Review
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  1. Olivia sold $500 of goods to a customer on Jan 15. She offered terms of 1/5, n/30. The customer paid her on Jan.22. What journal entry will Olivia make to record this payment?
    • Dr.   Cash 500
    •      Cr. Accounts Receivable 500
  2. Trevor sells goods on account with a $500 list price at a 15% trade discount.  How would he record this sale?
    • Dr.  Accounts Receivable 425
    •      Cr. Sales Revenue 425
  3. Claire makes a $3,000 loan to a customer on August 31. The loan carries a 9% interest rate and is due along with all interest due on Feb.28 of the following year. What adjusting entry will Claire make in relation to this note on December 31 of the current year?
    • Dr. Interest Receivable 90
    •     Cr. Interest Revenue 90
  4. Kyle uses the percentage of credit sales method to record bad debt expense.  He make $300,000 of credit sales during the year.  He estimates that 1.2% of credit sales are uncollectible.  Kyle has a $100 debit balance in the allowance for bad debts prior to making any adjusting entries.  How much bad debt expense should he record?
    $3,600
  5. Kyle began the year with $28000 of accounts receivable outstanding and ended th eyear with $34,500 of accounts receivable outstanding.  He made $450,000 worth of credit sales this year.  what is Kyle's average collection period for the year?
    25.3 days
  6. Kyle has $100,000 of accounts receivable, Ina normal yuear, he eends up writing off about 4% of accounts receivable.  For accounts that are less than 30 days old, hetypically writes off 2% of accounts receivable and for accounts that are 30 or more days old, he typically writes off 20% of accounts receivable,  At eh end of the year, he had $70,000 of accounts that were less than 30 days old and 30,000 of accounts that were 30 or more days old.  Kyle thinks he has been too generous in extending credit this year (e.g. he allowed too many people to buy on account) Do you agree with him?
    Yes
  7. Kyle's began the year with $20,000 in inventory, His sales revenue for the year is $400,000 and cost of goods sold is $300,000.  He had $50,000 of operating income and $30,000 of net income for the year.  he finished the year with $25,000 in inventory.
    What wree Kyle's selling, general and administrative expenses for the year?
    $50,000
  8. Kyle's began the year with $20,000 in inventory, His sales revenue for the year is $400,000 and cost of goods sold is $300,000.  He had $50,000 of operating income and $30,000 of net income for the year.  he finished the year with $25,000 in inventory.
    Kyle's competitor had an inventory turnover ratio of 15. On average, who sold their goods faster ths year?
    Kyle's Competitor
  9. Brad uses a periodic inventory system. Brad had the following sales and purchases in Jauary:
    Beginning Inventory 300 units @ $12 each
    Sale Jun. 2 - 250 units
    Purchase Jan. 5 - 350 units @ $13 each
    Sale Jan. 9 - 300 units
    Purchase Jan 13 - 200 Units @ $14 each
    Sale Jan.17 - 250 units
    Purchase Jan 25. - 150 units @ $15 each
    What was the cost of goods sold for the month assuming Brad uses FIFO?
    $10,250
  10. Brad uses a periodic inventory system. Brad had the following sales and purchases in Jauary:
    Beginning Inventory 300 units @ $12 each
    Sale Jun. 2 - 250 units
    Purchase Jan. 5 - 350 units @ $13 each
    Sale Jan. 9 - 300 units
    Purchase Jan 13 - 200 Units @ $14 each
    Sale Jan.17 - 250 units
    Purchase Jan 25. - 150 units @ $15 each
    What was the ending inventory balance for the month assumig brad uses the weighted average method(round the wighted average cost to the nearest penny.
    $2,640
  11. Brad uses a periodic inventory system. Brad had the following sales and purchases in Jauary:
    Beginning Inventory 300 units @ $12 each
    Sale Jun. 2 - 250 units
    Purchase Jan. 5 - 350 units @ $13 each
    Sale Jan. 9 - 300 units
    Purchase Jan 13 - 200 Units @ $14 each
    Sale Jan.17 - 250 units
    Purchase Jan 25. - 150 units @ $15 each
    Brad had net sales of $21,300 for the nonth.  What was his gross profit for the month assuming he uses LIFO.
    10,500
  12. When costs ar rising, companies will generally report the highest profit if they use the FIFO assumption.
    True or False
    True
  13. Kyle uses a perpetual inventory system. He receives an invoice for his purchase of $5,000 worth of goods with terms 3/10, n/60. Kyle pays the invoice 8 days later. How would he record his payment?
    • Dr. Accounts Payable 5000
    •           Cr. Inventory 150
    •           Cr. Cash 4850
  14. Kyle sells guns and snuggies.  He has 200 snuggies in his inventory with a cost of $6 each, and 20 guns with a cost of $225 each.  The snuggies have a market value of $8 and th eguns have a market value of $200 each. What adjustment would Kyle make to his inventory under the lower-of-cost-or-market rule?
    • Dr. Cost of Goods Sold 500
    •      Cr. Inventory 500
  15. Olivia buys a building and incurs the following costs: $600,000 purchase price, $10,000 insurance fo firsst year, $6,000 property taxes for the first year, $50,000 to renovate part of the building, $15,000 closing costs on the purchase of the building and $5,000 received form the sle of spare parts as a result of therenovatio.  What will be the total capitalized cost of the building?
    $660,000
  16. Trevor bought a delivery truck costing $409,000 on Jan1, 2011.  He estimates a 10-year or 200,000 mile useful life, and believes that he will be able to sell the truck for $2,000 at eh end of its useful life, The odometer read 24,000 and 43,000 at the end of years 1 and 2 repectively.
    How much deprciation will Trevor record in year 2 assuming he uses the straight-line method of depreciation?
    $3,800
  17. Trevor bought a delivery truck costing $409,000 on Jan1, 2011.  He estimates a 10-year or 200,000 mile useful life, and believes that he will be able to sell the truck for $2,000 at eh end of its useful life, The odometer read 24,000 and 43,000 at the end of years 1 and 2 repectively.
    How much depreiation will tevor reord in year 2 assuming he uses the activity-based method of depriciation?
    $3,610
  18. Trevor bought a delivery truck costing $409,000 on Jan1, 2011.  He estimates a 10-year or 200,000 mile useful life, and believes that he will be able to sell the truck for $2,000 at eh end of its useful life, The odometer read 24,000 and 43,000 at the end of years 1 and 2 repectively.
    How much depreciation will Trevor record in year 2 assuming he uses th double declining balance method?
    $6,400
  19. In general, if the value of long-term assets declines sufficiently, firms are required to write down the value of their asets to their fair values and record a loss(called an impairment loss) which reduces net income.  However, ifteh value of long-term asets increases, firms generally do not record any kind of gian on th increase in value unless they sellt he asset. Taken together, these rules are an example of which accounting principle?
    Conservatism
  20. Claire bought a local store for $800,000. As part of the purchase, she received land, a building and som efurnishings.  She estimates the fiar values as follows: land:$200,000, building: $700,000, furnishings: $100,000. What journal entry would she make to record this purchase?
    • Dr. Land 160,000
    • Dr. Bulding 560,000
    • Dr Furnishings 80,000
    •      Cr. Cash     800,000
  21. Kyle trades in his old machine for a new on.  The old machine had an original cost of $20,000 and accumulated depreciation of $16,500.  the new machine has a $25,000 cost.  Kyle will pay $22,700 for the new machine (and receive a $2,300 credit for his trade-in).
    Which of the following would not be part of the ournal entry to record this trade-in?
    Credit Gain on sale 1,200
  22. Kyle has an asset turnover ratio of 3, net income of $96,000 and average assets of $800,000.  what is Kyle Profit margin for the period?
    4%
  23. For tax purposes, companies use the direct write-off method for bad debts because it is most accurate(e.g., only actural bad debts are recorded as bad debt expense).  Financial accounting rules reqire firms to use one of the alowance methods instea.  why do financial accouting rules require the allowance method?
    The matching principle
  24. Kirsten's Kitchens uses a periodic FIFO inventory system. Kirsten sells a refrigerator for$600 cash.  The refrigerator cost her $400 to buy. How would she record this sale?
    • Dr.  Cash 600
    •      Cr Sales revenue 600

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