Accounting and Sales Recognition Worksheet

Which of the following statements is correct?

• Revenue is recognized at the time of shipment when goods are shipped FOB destination.

• Sales returns and allowances are reported as operating expenses on an income statement.

• A seller records revenue when title and risks of ownership transfer to the buyer.

• Sales discounts are reported as cost of sales on an income statement.

Which of the following would be included in Latimer Company's sales in 2019?

• Goods shipped from a supplier in 2019 with terms of FOB shipping point. Latimer received the goods in 2019.

• Goods shipped to customers in 2019 with terms of FOB destination. The customer received the goods in 2020.

• Goods shipped to customers in 2018 with terms of FOB destination. The customer received the goods in 2019.

• Goods shipped to customers in 2018 with terms of FOB shipping point. The customer received the goods in 2019.

A company sells a product FOB destination. The product is shipped on December 29, 2018 and the customer receives the shipment on January 3, 2019. Which of the following is true?

• The sale will be recorded when the customer's credit card information is received.

• The sale will be recorded when the shipment is received by the customer.

• The sale will be recorded when the shipment is shipped.

• The sale will be recorded when it is known there will be no returns or allowances.

Which of the following is not a reason for the Jones Hardware Store to accept credit cards from customers?

• Jones can receive its money faster than if it directly extended credit to the customer by an account receivable.

• The credit card company offers a discount to Jones so that Jones will have more money available for operations.

• Jones will not have to be concerned with nonsufficient funds checks from customers.

• Jones will not have to have extra office workers to make phone calls to customers requesting collections on accounts.

• $1,634,000.

• $1,800,000.

• $1,667,000.

• $1,745,000.

Newark Company has provided the following information: (same as above) How much is Newark's cost of sales?

• $307,000.

• $252,000.

• $440,000.

• $340,000.

Newark Company has provided the following information: (same as above) How much cash was collected from customers?

• Cash flow increased $1,295,000.

• Cash flow increased $1,612,000.

• Cash flow decreased $1,855,000.

• Cash flow increased $1,405,000.

Cash sales, $150,000 Credit sales, $450,000 Selling and administrative expenses, $110,000 Sales returns and allowances, $30,000 Gross profit, $490,000 Accounts receivable, $110,000 Sales discounts, $14,000 Allowance for doubtful accounts credit balance, $1,200 Flyer prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. How much is bad debt expense?

• $5,500.

• $6,700.

• $4,240.

• $4,300.

Flyer Company has provided the following information prior to any year-end bad debt adjustment:

• Cash sales, $150,000

• Credit sales, $450,000

• Selling and administrative expenses, $110,000

• Sales returns and allowances, $30,000

• Gross profit, $490,000

• Accounts receivable, $110,000

• Sales discounts, $14,000

• Allowance for doubtful accounts credit balance, $1,200

Flyer prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible.

What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

• $5,500.

• $6,700.

• $4,240.

• $4,300.

Flyer Company estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. How much is Flyer's bad debt expense?

• $7,950.

• $6,750.

• $5,550.

• $7,800.