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The following information was taken from the accounting records of ABC Company for the period
ended January 31, 2003

 

cost of goods sold ……………………   $59,000

sales returns & allowances …………….    14,000

bad debt expense ……………………..    10,000

accounts receivable …………………..    40,000

sales revenue ………………………..    98,000

allowance for doubtful accounts…………    23,000

 

 

Calculate the amount of gross profit for the month of January. Do not use decimals in your
answer.

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Question 1 (3.5 points)

 

Question 2 options

The following information is available for XYZ Company:

 

January 1, 2006       December 31, 2006

 

Accounts receivable       80,000                    ?

 

The following information was taken from XYZ Company’s 2006 income statement:

 

Sales revenue                   $300,000

Cost of goods sold               120,000

Salaries expense                  50,000

Rent expense                      20,000

Income tax expense                33,000

Net income                      $ 77,000

 

XYZ Company reported an average collection period of 91.25 days during 2006.

Calculate the accounts receivable balance at December 31, 2006. Do not use decimals in your answer.

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Question 2(4 points)

 

Match each statement below with the appropriate inventory costing method. Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all. Be careful with matching questions because carmen randomizes the matches. Thus, if you print out the quiz to work on it and then enter your answers later in the week, it is very likely the order of the matches will be different. Therefore, exercise caution when entering your answers into carmen. Quiz scores will not be adjusted for errors in entering choices.

 

Question 3 options
 

1 2 3 4This inventory costing method shows cost of goods sold on the income statement at the most current inventory costs during a period of increasing inventory costs (i.e., inflation)
1 2 3 4This inventory costing method results in the highest amount of income tax expense reported on the income statement during a period of decreasing inventory costs (i.e., deflation)
1.LIFO
2.FIFO
3.weighted average
4.all methods would show the same amount

 
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Question 3(4 points

 

Question 4 options
 
Charlet Company sells office chairs to its customers. On June 10, Charlet purchased 40 office chairs

from one of its suppliers, paying $120 per chair. On July 5, Rutherford Corporation purchased 18 of

these office chairs from Charlet for a list price of $200 each. Rutherford returned 3 of the chairs

on July 7 and paid the remainder of the invoice on July 16. Charlet offers credit terms of 5/15, n/40

to its credit customers.

Calculate the amount of cash Rutherford Corporation paid to Charlet on July 16. Do not use decimals

in your answer.
 
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Question 4 (4.5 points)

 

Question 5 options
 
ABC Company employs a periodic inventory system and sells its inventory to customers for $25 per
unit. ABC Company had the following inventory information available for the month of May

 

May 1    Beginning inventory 5,000 units @ $9 cost per unit

May 6    Purchased 4,000 units @ $11 cost per unit

May 8    Sold 3,000 units

May 13   Purchased 2,000 units @ $5 cost per unit

May 18   Sold 2,500 units

May 21   Purchased 2,500 units @ $8 cost per unit

May 28   Sold 1,800 units

May 30   Purchased 2,000 units @ $18 cost per unit

 

Calculate the dollar amount of ending inventory shown on ABC Company’s May 31 balance sheet using
the FIFO method. Do not use decimals in your answer.
 
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Question 5 (4.5 points)

 

Question 6 options
 

ABC Company employs a periodic inventory system and sells its inventory to customers for $25 per

unit. ABC Company had the following inventory information available for the month of May:
 
May 1    Beginning inventory 5,000 units @ $9 cost per unit

May 6    Purchased 4,000 units @ $11 cost per unit

May 8    Sold 3,000 units

May 13   Purchased 2,000 units @ $5 cost per unit

May 18   Sold 2,500 units

May 21   Purchased 2,500 units @ $8 cost per unit

May 28   Sold 1,800 units

May 30   Purchased 2,000 units @ $18 cost per unit

Calculate the amount of gross profit shown on ABC Company’s income statement for May using the

weighted average method. Do not use decimals in your answer.
 
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Question 6 (5 points)

 

Question 7 options
 
ABC Company employs a periodic inventory system and sells its inventory to customers for $25 per

unit. ABC Company had the following inventory information available for the month of May
 
May 1    Beginning inventory 5,000 units @ $9 cost per unit

May 6    Purchased 4,000 units @ $11 cost per unit

May 8    Sold 3,000 units

May 13   Purchased 2,000 units @ $5 cost per unit

May 18   Sold 2,500 units

May 21   Purchased 2,500 units @ $8 cost per unit

May 28   Sold 1,800 units

May 30   Purchased 2,000 units @ $18 cost per unit

Assume ABC Company uses the LIFO inventory costing method and that ABC Company’s income statement

for May showed operating expenses of $21,200 and an income tax rate of 35%.

Calculate the amount of net income reported on ABC Company’s income statement for May. Do not use

decimals in your answer.
 
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Question 7(5 points)

 

Question 8 options
 
Harrison Company records bad debt expense using the net credit sales method and has estimated that
4% of its credit sales will prove to be uncollectible. During 2004, Harrison Company reported net
credit sales of $150,000 and collected $120,000 cash from its credit customers. Additionally,
Harrison Company wrote-off as uncollectible accounts receivable of $7,000 during 2004. Accounts
receivable at January 1, 2004 were $70,000 and the allowance for doubtful accounts had a $9,000
credit balance at January 1, 2004.
 
Calculate the net realizable value of Harrison Company’s accounts receivable at December 31, 2004.
Do not use decimals in your answer.
 

 
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Question 8 (6 points)

 

For each transaction listed below, indicate the effect on net income and the net realizable value of accounts receivable. Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all. Be careful with matching questions because carmen randomizes the matches. Thus, if you print out the quiz to work on it and then enter your answers later in the week, it is very likely the order of the matches will be different. Therefore, exercise caution when entering your answers into carmen. Quiz scores will not be adjusted for errors in entering choices.
 
Question 9 options
 

1 2 3 4 5 6 7 8 9ABC Company recorded bad debt expense for the year
1 2 3 4 5 6 7 8 9ABC Company wrote off an account receiveable as uncollectible
1 2 3 4 5 6 7 8 9ABC Company sold inventory to a customer on account (i.e., on credit)
1 2 3 4 5 6 7 8 9ABC Company received payment from a customer that it had written-off previously (i.e., recorded a recovery)
1.increase net income; increase net realizable value
2.decrease net income; decrease net realizable value
3.no effect on net income; no effect on net realizable value
4.increase net income; decrease net realizable value
5.decrease net income; increase net realizable value
6.no effect on net income; increase net realizable value
7.no effect on net income; decrease net realizable value
8.increase net income; no effect on net realizable value
9.decrease net income; no effect on net realizable value

 
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Question 9 (5 points)

 

Question 10 options
 
Jackson Company reported the following information relating to its inventory for 2007:

sales revenue ………………………..  $427,000

freight-in …………………………..    11,700

purchase returns ……………………..    16,500

beginning inventory …………………..    55,000

purchases ……………………………   329,800

freight-out ………………………….    10,900

sales returns & allowances …………….    15,000

purchase discounts ……………………      ?

 

Jackson Company also reported the following financial statement ratios

 

inventory turnover ratio ………………     4.12

gross profit rate …………………….      30%

 

Calculate the amount of purchase discounts reported by Jackson Company during 2007. Do not
use decimals in your answer.
 
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Question 10 (5 points)

 

 

Question 11 options
 
At January 1, 2002, Betty DeRose, Inc. had an allowance for doubtful accounts with a $2,700 credit balance. During 2002, Betty did not write-off any accounts receivable as uncollectible.Additionally, during 2002, Betty recorded $1,400 of recoveries of accounts receivable written off in prior years. At December 31, 2002, Betty prepared the following aging schedule
 
Accounts Receivable      % Uncollectible

 

not past due            $150,000                   2%

1-30 days past due        35,000                   5%

31-60 days past due         ?                      8%

61-90 days past due        8,000                  15%

over 90 days past due      2,000                  50%

 

Based on the above information, Betty DeRose, Inc. estimated its bad debt expense to be $6,210
for 2002. Calculate the amount of accounts receivable that were 31-60 days past due. Do not use
decimals in your answer.
 
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