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8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales...


8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d
The inventory data for an item for September are: Sep. 1 10 Inventory Sold Purchased Sold Purchased 20 units at $20 10 units
19. If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, ba
26 A 24. The primary ledger containing all the balance sheet and income statement accounts is the a. general ledger b. credit
31. Multiple-step income statements show a gross profit but not income from operations b. neither gross profit nor income fro
38. During times of rising prices, which of the following is not an accurate statement? a. Average costing will yield results
45. A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be inc
Problem 1. Selected data from the ledger of Morrison Co. after adjustment at September 30, 2010 the end of the fiscal year, a
4. The cash account for Santiago Co. on May 31, 2009 indicated a balance of $15,515.00. The March bank statement indicated an
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d. Interest Revenue 9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales 10. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account? a. $4,500 b. $10,500 c. $10,290 d. $14,700 11. If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as a. FOB shipping point b. FOB destination C. FOB n/30 d. FOB buyer Inventory shortage is recorded when a. merchandise is returned by a buyer. b. merchandise purchased from a seller is incomplete or short. c. merchandise is returned to a seller. d. there is a difference between a physical count of inventory and inventory records. 13. The two most widely used methods for determining the cost of inventory are a. FIFO and LIFO b. FIFO and average c. LIFO and average d. gross profit and average 14. Under which method of cost flows is the inventory assumed to be composed of the most recent costs? a. average cost b. last-in, first-out c. first-in, first-out d. weighted average
The inventory data for an item for September are: Sep. 1 10 Inventory Sold Purchased Sold Purchased 20 units at $20 10 units 30 units at $25 20 units 10 units at $30 17 30 15. Using the perpetual system, costing by the last-in, first-out method, what is the cost of the merchandise inventory of 30 units on September 30? a $800 b. $650 c. $750 d. $700 16. Using the perpetual system, costing by the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on September 30? a $800 b. $650 c. $750 d. $700 17. The following lots of a particular commodity were available for sale during the year: Beginning inventory First purchase Second purchase Third purchase 10 units at $30 25 units at $32 30 units at $34 10 units at $35 The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year What is the amount of inventory at the end of the year according to the last-in, first-out method? a $655 b. $620 c. $690 d. $659 18. Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error? a. net income is understated b. net income is overstated c. cost of merchandise sold is understated d. merchandise inventory reported on the balance sheet is overstated
19. If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data? Sep. 1 Sep. 1-30 Sep. 1-30 Merchandise inventory Purchases (net) Sales (net) $ 125,000 300,000 150,000 a. $380,000 b. $320,000 c. $275,000 d. $105,000 20. The cash account in the company's ledger is a(n) a. asset with a debit balance b. asset with a credit balance c. liability with a debit balance d. liability with a credit balance 21. The amount of the outstanding checks is included on the bank reconciliation as a(n) a. deduction from the balance per company's records b. addition to the balance per bank statement c. deduction from the balance per bank statement d. addition to the balance per company's records 22. Meredith Company gathered the following reconciling information in preparing its May bank reconciliation: Cash balance per books, 5/31 Deposits in transit Notes receivable and interest collected by bank Bank charge for check printing Outstanding checks NSF check The adjusted cash balance per books on May 31 is $2,500 150 650 40 1.800 140 a $2,970 b. $3,120. c. $5,280 d. $1,320 During a bank reconciliation process, a. Outstanding checks and deposits in transit are added to the bank statement balance. b. Outstanding checks are subtracted and deposits in transit are added to the bank statement balance. c. Outstanding checks and deposits in transit are subtracted from the bank statement balance. d. Outstanding checks are added and deposits in transit are subtracted to the bank statement balance.
26 A 24. The primary ledger containing all the balance sheet and income statement accounts is the a. general ledger b. creditors ledger c. customers ledger d. subsidiary ledger 25. The individual accounts with customers are included in a subsidiary ledger called the a. asset ledger b. accounts payable ledger c. expense ledger d. accounts receivable ledger A purchase of supplies for cash is recorded in the a. Revenue journal b. Purchases journal c. Cash Receipts journal d. Cash Payments journal 27. A purchase of supplies on account is recorded in the a. Revenue journal b. General journal c. Purchases journal d. Cash Payments journal 28. In which journal would an adjustment for an overcharge by a creditor be recorded? a. General journal b. Purchases journal c. Cash Payments journal d. Cash Receipts journal 29. Which of the following transactions is recorded in the revenue journal? a. sale of excess office equipment for cash b. rendering services for cash c. rendering services on account d. sale of excess office equipment on account 30. A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, S650, Purchases, $10,700, Purchases Returns and Allowances, $1,950, Purchases Discounts, $330. The cost of merchandise purchased is equal to a. $12,670 b. $9,070 c. $8,420 d. $17,230
31. Multiple-step income statements show a gross profit but not income from operations b. neither gross profit nor income from operations c. both gross profit and income from operations d. income from operations but not gross profit 32. Merchandise inventory is classified on the balance sheet as a a. Current Liability b. Current Asset c. Long-Term Asset d. Long-Term Liability 33. If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as a. FOB shipping point b. FOB destination c. FOB n/30 d. FOB seller 34. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? a. Merchandise Inventory b. Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold 35. Which of the following inventory cost methods is appropriate for a business who has inventory with a relatively small number of unique items and a high cost per item? a FIFO b. LIFO c. average d. specific identification 36. The inventory method that considers the inventory to be composed of the units of merchandise acquired earliest is called a. first-in, first-out b. last-in, first-out c. average cost d. retail method 37. Which of the following companies would be more likely to use the specific identification inventory costing method? a. Gordon's Jewelers b. Lowe's c. Best Buy d. Wal-Mart
38. During times of rising prices, which of the following is not an accurate statement? a. Average costing will yield results that are between those of FIFO and LIFO. b. LIFO will result in a higher cost of goods sold than FIFO. c. FIFO will result in a higher net income than LIFO. d. LIFO will result in higher income taxes than FIFO. 39. Inventory turnover a. is computed by dividing average inventory by cost of merchandise sold b. measures the relationship between the volume of goods sold and amount of inventory carried c. increases the risk of loss from damaged merchandise d. is computed by dividing the beginning inventory plus the ending inventory by two 40. The number of days' sales in inventory a. measures the length of time it takes to acquire, sell, and replace the inventory b. is computed by dividing the cost of merchandise sold by 365 c. measures the length of time it takes to sell the merchandise on credit and collect the account receivable d. is about the same for all industries 41. Which one of the following below reflects a weak internal control system? a. all employees are well supervised b. a single employee is responsible for comparing a receiving report to an invoice c. all employees must take their vacations d. a single employee is responsible for collecting and recording of cash 42. The debit balance in Cash Short and Over at the end of an accounting period is reported as a. an expense on the income statement b. income on the income statement c. an asset on the balance sheet d. a liability on the balance sheet 43. The term cash includes a. coins, currency (paper money), checks b. money orders, and money on deposit that is available for unrestricted withdrawal c. short-term receivables d. both a and b 44. A bank statement a. is a credit reference letter written by the company's bank. b. lets a company know the financial position of the bank as of a certain date. c. is a bill from the bank for services rendered. d. shows the activity that increased or decreased the company's account balance.
45. A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be included on the bank reconciliation as a(n) a. addition to the balance per the company's records b. addition to the balance per the bank statement c. deduction from the balance per the bank statement d. deduction from the balance per the company's records 46. A Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is a. a deduction from the balance per company's records b. an addition to the balance per bank statement a deduction from the balance per bank statement d. an addition to the balance per company's records A check drawn by a company in payment of a voucher for $635 was recorded in the journal as $365. This item would be included in the bank reconciliation as a(n) a. deduction from the balance per the company's records b. addition to the balance per the bank statement c. deduction from the balance per the bank statement d. addition to the balance per the company's records 48. The amount of deposits in transit is included on the bank statement as an) a. deduction from the balance per the company's books b. deduction from the balance per bank statement c. addition to the balance per bank statement d. addition to the balance per company books A $150 petty cash fund has cash of $28 and receipts of $110. The journal entry to replenish the account would include a a. credit to Petty Cash for $82. b. debit to Cash for $110. c. debit to Cash Over and Short for $12. d. credit to Cash for $110 50. A minimum cash balance required by a bank is called a. cash in bank b. cash equivalent c. compensating balance d. EFT
Problem 1. Selected data from the ledger of Morrison Co. after adjustment at September 30, 2010 the end of the fiscal year, are listed as follows: $ Accounts Receivable Accumulated Depreciation Administrative Expenses Bob Morrison, Capital Cost of Merchandise Sold Bob Morrison, Drawing Interest Revenue $ 39,120 60,540 90,000 85,000 550,000 65,000 10,000 Office Equipment Prepaid Insurance Note Payable Salaries Payable Sales (net) Selling Expenses Supplies 82,700 4,680 77,750 3,060 950,000 102,000 3,125 Prepare an income statement, using the single-step form, and a statement of owner's equity. 2. The transactions completed by Franklin Company during January, its first month of operations, are listed below. Assume that Peach Company uses the following journals: Cash Receipts (CR), Cash Payments (CP), Revenue (R), Purchases (P), and General (G). Assume that it uses Accounts Receivable and Accounts Payable Subsidiary Ledgers as well as a General Ledger. Indicate by letters which journal would be used for each transaction. Also indicate if the entry requires a posting to a subsidiary ledger. ||||| (5) (1) Issued check for rent. (2) Purchased equipment on account. (3) Issued an invoice to a customer. (4) Received a check from a customer for payment on account. Issued check for advertising expense. (6) Issued check for a payment on account. (7) Issued check for cash purchase of supplies. (8) Issued check for salary. (9) Received cash for a sale. (10) Purchased supplies on account. 3. Basic inventory data for April 30 are presented below for a business that employs the lower of cost or market basis of inventory valuation. Unit Market Price $ 55 Unit Cost Price $ 52 155 Total Lower of Cor M Commodity Quantity 150 20 82 35 (a) (b) Complete the table. Determine the amount of reduction in the inventory at April 30 attributable to market decline.
4. The cash account for Santiago Co. on May 31, 2009 indicated a balance of $15,515.00. The March bank statement indicated an ending balance of $20,245.00. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items a. b. c. Checks outstanding totaled $4,820.00 A deposit of $3,796.00 had been made too late to appear on the bank statement. A check for $1,233.00 returned with the statement had been incorrectly recorded as $233.00. The check was originally credited to accounts payable. The bank collected $5,541.00 on a note left for collection. Bank service charges for May amounted to $45.00. A check for $790.00 was returned by the bank because of insufficient funds. d. e. f. Prepare a bank reconciliation as of May 31, 2009. Journalize the necessary entries. Santiago Co. Bank Reconciliation May 31, 2009 Journal Post Ref Date Description Debit Credit
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Answer #1

As per HOMEWORKLIB POLICY and guideline, the first-four MCQs are answered below:

8.

Answer: b

Out of the choices given, the account “sales returns and allowances” has debit balance only; this is the contra of “sales revenue”; since sales revenue has normal credit balance, the sales returns and allowance account has normal debit balance for making contra adjustment.

9.

Answer: b

Merchandise Inventory should be debited, since the purchase increases inventory and it becomes an increase in asset.

Sales account should not be affected, because a purchase doesn’t mean that it has been sold.

10.

Answer: b

This would be the amount after deducting trade discount only. The credit term “2/10, n/30” should not be considered here – this would be applicable when the payment is made.

Required amount = Catalog price × (1 – trade discount)

                            = 15,000 × (1 – 0.30)

                            = 15,000 × 0.70

                            = 10,500

11.

Answer: b

This is called “FOB destination”.

Seller delivers goods at the buyer’s place, which is also called the destination.

“FOB” means free on board – once the goods are received, the buyer has to pay the relevant freight cost.

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