WorksheetsACC201_Test 2 Practice Quiz
Total questions: 40
Worksheet time: 3600secs
At the beginning of the year, Paradise Co. had an inventory of $200,000. During the year, the company purchased goods costing $900,000. Paradise Co reported ending inventory of $300,000 at the end of the year. Their cost of goods sold is
$1,000,000
$800,000
$1,400,000
$400,000
Under the perpetual inventory system, in addition to making the entry to record a sale, a company would
debit Inventory and credit Cost of Goods Sold.
debit Cost of Goods Sold and credit Purchases.
debit Cost of Goods sold and credit Inventory.
make no additional entry until the end of the period.
Gross profit equals the difference between net sales and
operating expenses
cost of goods sold
net income
cost of goods sold plus operating expenses
The entry for a buyer to record the return of goods under a perpetual inventory system assuming the purchase was made on account would include a
debit to inventory
debit to purchase returns and allowances
credit to accounts payable
debit to accounts payable
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?
Freight Expense
Freight-In
Inventory
Freight-Out
Cost of goods sold can be calculating by which of the following formulas?
Beginning Inventory + Net Purchases – Ending Inventory
Ending Inventory + Net Purchases – Beginning Inventory
Beginning Inventory + Sales – Ending Inventory
Ending Inventory + Sales – Beginning Inventory
The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a
debit to Sales Discounts for $36.
debit to Sales Revenue for $1,764.
credit to Accounts Receivable for $1,800.
credit to Sales Revenue for $1,800.
The entry to record the receipt of payment within the discount period on a sale of $10,000 with
terms of 3/15, n/60 will include a
credit to Sales Discounts for $300.
debit to Cash for $9,700.
credit to Accounts Receivable for $9,700.
credit to Sales Revenue for $10,000.
Under a perpetual inventory system
accounting records continuously disclose the amount of inventory.
increases in inventory resulting from purchases are debited to purchases.
there is no need for a year-end physical count.
the account purchase returns and allowances is credited when goods are returned to vendors.
In the credit terms of 3/15, n/60, the “15” represents the
number of days in the discount period.
full amount of the invoice.
number of days when the entire amount is due.
percent of the cash discount.
Livingston Company sells merchandise on account for $6,000 to Briggs Inc. on April 10 with credit terms 3/15, n/60. Briggs returns $1,000 of the merchandise on April 15. Briggs paid for the remainder of the goods within the discount period on April 20. What entry would Briggs make to record the return on April 15 if it uses the perpetual inventory system?
Dr Cash $1,000 and Cr Inventory $1,000
Dr Accounts Payable $1,000 and Cr Inventory $1,000
Dr Accounts payable $970 and Cr Inventory $970
Dr Purchase Returns $1,000 and Cr Inventory $1,000
Livingston Company sells merchandise on account for $6,000 to Briggs Inc. on April 10 with credit terms 3/15, n/60. Briggs returns $1,000 of the merchandise on April 15. Briggs paid for the remainder of the goods within the discount period on April 20. What entry would Briggs make to record the payment on April 20 if it uses the perpetual inventory system?
Dr Accounts Payable $6,000 and Cr Cash $6,000
Dr Accounts Payable $5,820 and Cr Cash $5,820
Dr Accounts Payable $5,000; Cr Inventory $150 and Cr Cash $4,850
Dr Accounts Payable $5,000; Cr Sales discounts $150 and Cr Cash $4,850
Maggie’s Market recorded the following events involving a recent purchase of merchandise:
· Received goods for $50,000, terms 2/10, n/30.
· Returned $1,500 of the shipment for credit.
· Paid $400 freight on the shipment.
· Paid the invoice within the discount period.
As a result of these events, the company’s inventory increased by
$48,192
$49,400
$47,930
$48,900
McIntyre Company made a purchase of merchandise on credit from Marvin Company on August 8, for $11,000, terms 3/10, n/30. On August 17, McIntyre makes the appropriate payment to Marvin. The entry on August 17 for McIntyre Company is
Debit Accounts Payable, $ 11,000; Credit Cash, $ 11,000
Debit Account Payable, $ 10,670; Credit Cash, $ 10,670
Debit Account Payable, $ 11,000; Credit Purchase Returns and Allowances, $ 330; Credit Cash, $ 10,670.
Debit Account Payable, $ 11,000; Credit Inventory, $ 330; Credit Cash, $ 10,670
Quayle Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as picture.
Quayle does not maintain perpetual inventory records. According to a physical count, 360 units were on hand at January 31.
The cost of the inventory at January 31, under the FIFO method is:
$ 3,240
$ 3,650
$ 4,100
$ 3,820
An aging of a company's accounts receivable indicates that $13,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a
debit to Bad Debt Expense for $13,000
debit to Allowance for Doubtful Accounts for $11,800
debit to Bad Debt Expense for $11,800
credit to Allowance for Doubtful Accounts for $13,000
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:
DR Account Receivable - A.Hopkins, $ 2,000; CR Allowance for Doubtful Account, $ 2,000.
DR Allowance for Doubtful Account, $ 2,000; CR Bad Debt Expense, $ 2,000.
DR Allowance for Doubtful Account, $ 2,000; CR Account Receivable - A.Hopkins, $ 2,000
DR Cash, $ 2,000; CR Account Receivable - A.Hopkins, $ 2,000.
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $12,000. If the balance of the Allowance for Doubtful Accounts is $2,500 credit before adjustment, what is the amount of bad debt expense for that period?
$ 2,500
$ 9,500
$ 12,000
$ 14,500
During 2016, Belfour Inc. had sales on account of $189,000, cash sales of $78,000, and collections on account of $162,000. In addition, they collected $1,275 which had been written off as uncollectible in 2015. As a result of these transactions, the change in the accounts receivable balance indicates a
$ 25,725 increase.
$ 27,000 increase
$ 103,725 increase
$ 105,000 increase
A 90-day note dated May 18 has a maturity date of
August 18
August 16
August 17
August 19
A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. The cost of land would be recorded at
$ 107,000
$ 90,000
$ 70,000
$ 102,000
Moreno Company purchased equipment for $900,000 on January 1, 2016, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $40,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2018 will be
$ 100,000
$ 60,000
$ 108,880
$ 68,880
A company purchased factory equipment for $700,000. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be
$ 280,000
$ 168,000
$ 252,000
$ 120,960
A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2017. The Accumulated Depreciation account had a balance of $144,000 after the current year's depreciation of $36,000 had been recorded. The company should recognize a
$ 240,000 loss on disposal
$ 96,000 gain on disposal.
$ 96,000 loss on disposal
$ 60,000 loss on disposal.
Nicholson Company purchased equipment on January 1, 2015, for $80,000 with an estimated salvage value of $20,000 and estimated useful life of 8 years. On January 1, 2017, Nicholson decided the equipment will last 12 years from the date of purchase. The salvage value is still estimated at $20,000. Using the straight-line method the new annual depreciation will be:
$ 4,500
$ 5,000
$ 6,000
$ 6,667
Harper Corporation overstated its ending inventory by $3,500 on December 31, 2020. It did not correct the error in 2020 or in 2021. As a result, Harper Corporation’s Stockholders’ equity was
Overstated at 12/31/2020 and understated at 12/31/2021
Overstated at 12/31/2020 and properly stated at 12/31/2021
Understated at 12/31/2020 and understated at 12/31/2021 d
Overstated at 12/31/2020 and overstated at 12/31/2021
Honey Beez Company has the following picture. If Honey Beez Company has 7,000 units on hand at December 31, the cost of ending inventory under the
average-cost method is:
$75,250.
$84,000.
$70,000.
$56,000.
The interest on a $10,000, 9%, 90-day note receivable is
$225
$900
$75
$150
When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded
in the year after the credit sale is made.
in the same year as the credit sale.
as each credit sale is made.
when an account is written off as uncollectible.
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 debit before adjustment, what is the balance after adjustment?
$45,000
$51,000
$39,000
$6,000
In 20XX Wilkinson Company had net credit sales of $2,250,000. On January 1, 20XX, Allowance for Doubtful Accounts had a credit balance of $54,000. During 20XX, $90,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was
$600,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 20XX?
$ 60,000
$ 25,000
$ 96,000
$ 90,000
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45,000. If the balance of the Allowance for Doubtful Accounts is $6,000 credit before adjustment, what is the amount of bad debt expense for that period?
$45,000
$39,000
$51,000
$6,000
The calculation of depreciation using the declining-balance method
ignores salvage value in determining the amount to which a constant rate is applied.
multiplies a constant percentage times the previous year's depreciation expense.
yields an increasing depreciation expense each period.
multiplies a declining percentage times a constant book value.
Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the declining balance method (double). What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours?
$225,000.
$210,000.
$112,500.
$113,400.
Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?
Revisions in useful life are permitted if approved by the IRS.
Retroactive changes must be made to correct previously recorded depreciation.
Only future years will be affected by the revision.
Both current and future years will be affected by the revision.
The Land account would include all of the following costs except
drainage costs.
the cost of building a fence.
commissions paid to real estate agents.
the cost of tearing down a building.
Shaffer Company acquires land for $77,000 cash. Additional costs are as follows:
Removal of shed $300
Filling and grading 1,500
Salvage value of lumber of shed 120
Broker commission 1,130
Paving of parking lot 10,000
Closing costs 560
Shaffer will record the acquisition cost of the land as
$77,000.
$78,690.
$80,610.
$80,370.
P. Didee has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?
$4,744
$5,860
$4,940
$6,346
When valuing ending inventory under a perpetual inventory system, the
valuation using the LIFO assumption is the same as the valuation using the LIFO assumption under the periodic inventory system.
moving average requires that a new average be computed after every sale.
valuation using the FIFO assumption is the same as under the periodic inventory system.
earliest units purchased during the period using the LIFO assumption are allocated to the cost of goods sold when units are sold.
Equipment was purchased for $300,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be
$70,800
$58,800
$49,200
$48,000
