Chapter 4
A company has sales of $800,000 and cost of goods sold of $300,000. What is its gross profit?
$500,000
Dianna's Diamonds made the following purchases in the first quarter:
January: 20 units at $119
February: 30 Units at $140
March: 10 Units at $150.
At the end of the quarter, inventory included 3 items from the January purchases, 5 items from the February Purchase, and all items from the March Purchase. What is the cost of ending inventory?
January: 3 units at $119 = $357
February: 5 Units at $140 = $700
March: 10 Units at $150 = $1,500
Total Ending inventory = $2,557
Cash equivalent is...
Short-term, highly liquid investments that are:
1.Readily convertible to a known cash amount.
2.Close to maturity date and not sensitive to changes.
A company borrowed $20,000 by signing a 180-day promissory note at 10%. The total interest due on the maturity date is: (use 360 days a year)
$1000
When given terms 2/10, n/30; the 10 means:
Payment must be received in 10 days to receive discount.
Susan's Sweets uses a weighted-average perpetual inventory system and has the following purchases and sales:
Aug. 2: 20 units purchased at $5 per unit
Aug. 18: 40 units were purchased at $8 per unit
August 29: 22 units were sold at $15 per unit
What is the amount of Cost of Goods Sold for this sale?
[(20 X $5) + (40 X 8)] / 60 = $7/unit
$7 X 22 = $154
At the end of the day, the cash register's records show $1,789, but the count of cash in the register is $1,786. The correct entry to record the cash sales is:
Cash 1786
Cash over/short 3
Sales 1789
Raglan Company sold $500 of merchandise to a customer using a Visa card. Visa deducts 2% service charge for sales on its credit cards. The journal entry for this sale will be:
Cash 490
Credit card expense 10
Sales 500
A company purchased $2,000 of merchandise on July 1, with terms 3/10, n/30. On July 7, it returned $150 worth of merchandise. On July 8, it paid the full amount due. The amount of cash paid on July 8 equals:
$1,794.50
Susan's Sweets uses a FIFO perpetual inventory system and has the following purchases and sales:
Aug. 2: 20 units purchased at $5 per unit
Aug. 18: 40 units were purchased at $8 per unit
August 29: 22 units were sold at $15 per unit
What is the amount of Cost of Goods Sold for this sale?
FIFO LISH
20 X 5 = 100
2 X 8 = 16
COGS = $116
At the end of the day, the cash register's records show $2,543, but the count of cash in the register is $2,550. The correct entry to record the cash sales is:
Cash 2,550
Cash over/short 7
Sales 2,543
Kelly's Closets purchased $8,000 in construction supplies from ACME supply signing a 90-day 5% promissory note. If the note is dishonored, but Tubman intends to continue collection efforts, what is the journal entry to record the dishonored note?
Account Receivable - Kelly's Closets 8,100
Interest Revenue 100
Notes Receivable 8,000
FOB shipping point means __________, and the (buyer/seller) is responsible for paying transportation costs.
Ownership transfers from the seller to the buyer at the shipping point. The Buyer is responsible for paying transportation costs.
Susan's Sweets uses LIFO perpetual inventory system and has the following purchases and sales:
Aug. 2: 20 units purchased at $5 per unit
Aug. 18: 40 units were purchased at $8 per unit
August 29: 22 units were sold at $15 per unit
What amount is reported as inventory after this sale?
LIFO - FISH
# of units remaining in inventory 60-22 = 38
20 X 5 = 100
8 X 8 = 64
Inventory = $164
If a check correctly written and paid by the bank for $650 is incorrectly recorded on the company's books for $560, you should (add/subtract) $____ from the (Bank/Book) balance on the bank reconciliation?
Subtract $90 from the book balance
Carly's Cards begins the accounting period with a $10,000 credit balance in Allowance for doubtful accounts. On February 1, the company determined that $4,800 from Hallmarked was uncollectable. Record the entry to write off the account.
Allowance for Doubtful Accounts $4,800
Accounts Receivable - Hallmarked $4,800
In its first year of business, Becky's Beads had sales of $25,000 and cost of goods sold of $10,000. Becky expects returns in the following year to equal 5% of sales. The adjusting entry to record the expected sales returns is (are):
Sales Returns and Allowances 1,250
Sales Refund Payable 1,250
Inventory Returns Estimated 500
Cost of Goods Sold 500
Joe's normal selling price for its product is $200 per unit. However, due to market competition, the selling price has fallen to $180 per unit. Joe's inventory consists of 200 units at a cost of $165/unit. What, if any, adjustment to inventory should be made?
No adjustment needed:
Lower of Cost or Market Analysis:
Cost: 200 units @ $165 = $33,000 (current inventory value)
Market: 200 units @ $180 = $36,000
During the month of October, Janet's Jets had an outstanding deposit of $2,500. This amount should be (added/subtracted) from the (bank/book) balance on the bank reconciliation.
Added to the bank balance.
Carly's Cards begins the accounting period with a $10,000 credit balance in Allowance for doubtful accounts. On February 1, the company determined that $4,800 from Hallmarked was uncollectable, and wrote off the account. On April 3, Hallmarked paid their account. Record the entry or entries to reflect the collection.
Accounts Receivable - Hallmarked 4800
Allowance for Doubtful Accounts 4800
Cash 4800
Accounts Receivable - Hallmarked 4800