Accounting Exam 3

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Accounting Exam 3
2014-10-23 16:39:24
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  1. 1.Hess computer store has a credit sales of 450,000 in 2014 and a debit balance of 600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain uncollected. The credit manager of Hess prepared an aging schedule of accounts receivable and estimates that $7,800 will prove to be uncollectible. On March 4, 2015, the credit manager authorizes a write-off of the $1,000 balance owed by A. Myers. The journal entry to record the estimated uncollectible accounts at December 31,2014 will include
    A. a debit to bad debt expense of $7,800
    B. a debit to bad debt expense of $8,400
    C. a debit to bad debt expense of $7,200
    D. a debit to bad debt expense of $8,800
    B a debit to a bad debt expense of $8,400
  2. 2. A company using a perpetual inventory system that returns goods previously purchased on credit would
    A. debit accounts payable and credit inventory
    B. debit inventory and credit accounts payable
    C. debit accounts payable and credit purchase returns and allowances
    D. debit accounts payable and credit purchases
    A. debit accounts payable and credit inventory
    (this multiple choice question has been scrambled)
  3. 3. Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?
    D. To match bad debt expense to the period in which the revenues were earned
  4. 4. The following information was available to the accountant of Horton company when preparing the monthly bank reconciliation
    The amount of cash that should appear on the balnce sheet following the completion of the reconciliation adjustment of the accounting record is
    C. $620
  5. 5. Sassy saxophones has the following inventory data:
    Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis
    A. $10,992
  6. 6. If nuts and bolts hardware sells 570 switch plates for $7.00 each during November, what is the company's gross profit for November
    B. $1,482
  7. 7. The 2014 records of Thompson company showed beginning inventory, $6,000; cost of goods sold $14,000; and ending inventory, $8,000. The Cost of purchases for 2014 was:
    D. $16,000
  8. 8. A $15,000 overstatement of the 2014 ending inventory was discovered after the financial statements of 2014 were prepared. How would that inventory error impact the 2014 financial statement
    C. Current assets were overstated and net income was overstated
  9. 9. Maxell company uses the periodic FIFO method to assign costs to inventory and cost of goods sold. Given the following information what would be reported as the COGS and ending inventory balance for this period?
    D. COGAS: 600     Ending Inventory: 200
  10. 10. What is the annual rate of interest being charges on a 9-month note receivable of $50,000 if the total interest is $3,000?
    B. 8%
  11. 11. Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to
    A. Safeguard its assets
  12. 12. The situation that requires a departure from the cost basis of accounting to the lower of cost or market basis in valuing inventory is necessitated by
    A. A decline in the value of the inventory
  13. 13. the journal entry to record a deposit in transit is
    D. There is no journal entry required for deposits in transit
  14. 14. What is Howell's correct ending inventory balance at December 31, 2014
    D. $681,000
  15. 15. Using the above information, determine the cash balance per books before adjustments for the Clark Company
    C. $4,970
  16. 16. The adjusting entry for a NSF check will include
    B. A debit to accounts receivable and a credit to cash
  17. 17. Simonic retailers accpeted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges $5 for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue for $90,000 and a debit, or debits, to
    A. A cash $86,400 and a Service Charge Expense $3,600
  18. 18. The desired balance in Grimm's Allowance for Doubtful Accounts at December 31 will be
    A. $3,850
  19. 19. The adjustment to Grimm's Allowance for Doubtful Accounts at December 31 will be
    D. $2,250
  20. 20. In the Grimm's example above, if the Allowance for Doubtful Accounts had a $2,000 debit balance before making an adjusting entry for bad debts, the adjusting entry would be:
    • D. Bad Debt Expense       5,850
    •         Allowance for Doubtful Accounts     5850
  21. 21. The Allowance for Doubtful Accounts for Beck's, Inc. opened with a $10,000 credit balance, had write-offs $5,000 during the period, and had a desired ending balance of $20,000 based on an aging analysis, what was the amount of Bad Debt Expense
    C. $15,000
  22. 22. Burnham uses the FIFO inventory method. Cost of goods sold in the above information is based on ending inventory value of $250,000. The controller is considering a switch from FIFO to LIFO. He has determined that on LIFO basis the ending inventory value would be $205,000. Using LIFO, Burnham's Income before taxes would be
    B. $255,000
  23. 23. The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of March is
    A. $462,900
  24. 24. A $100 petty cash fund has cash of $10 and recipts of $80. The journal entry to replenish the account would include a credit to
    A. Cash for $90
  25. 25. Stan's Market recorded the following events involving a recent purchase of inventory: Reveived goods for $90,000 terms 2/10, net 30; returned $1800 of the shipment for credit paid $450 freight on the shipment; paid the invoice within the discounts period As a result of these vents, the company's inventory
    D. Increased by $86,886