These checks have been written and recorded by the company and sent to payees, but not yet paid by the bank.
Outstanding checks
100
Under this shipping term, the BUYER pays the freight and owns the goods while they are in transit.
FOB shipping point
100
This costing method leaves the MOST RECENT costs in ending inventory on the balance sheet.
FIFO (First-In, First-Out)
100
The Allowance for Doubtful Accounts is this TYPE of account with this NORMAL balance.
Contra-asset account; normal CREDIT balance
100
Perpetual system: sold goods for $800 cash; the goods cost $500. Give both entries.
Dr. Cash 800, Cr. Sales Revenue 800; Dr. Cost of Goods Sold 500, Cr. Inventory 500
200
On a bank reconciliation, a deposit in transit is ADDED to this side: the bank balance or the book balance?
Added to the BANK balance
200
Explain the credit terms "2/10, n/30."
2% discount if paid within 10 days; otherwise the full (net) amount is due within 30 days
200
When prices are RISING, this costing method produces the LOWEST taxable income (and lowest income taxes).
LIFO (Last-In, First-Out)
200
Credit sales are $300,000 and 1.5% are estimated to be uncollectible (percentage of credit sales method). What is Bad Debt Expense, and what is the entry?
$4,500. Dr. Bad Debt Expense 4,500; Cr. Allowance for Doubtful Accounts 4,500
200
A customer returns goods originally sold on account for $300 (cost $180); the goods go back into inventory. Give both entries.
Dr. Sales Returns & Allowances 300, Cr. Accounts Receivable 300; Dr. Inventory 180, Cr. Cost of Goods Sold 180
300
Which of these require a journal entry in the company's books? Outstanding checks, NSF check, deposit in transit, bank service charge.
Only the NSF check and the bank service charge (book-side items)
300
Net sales are $250,000 and Cost of Goods Sold is $165,000. What is the gross profit percentage?
34% (Gross profit $85,000 / Net sales $250,000)
300
COGS = $600,000; beginning inventory = $70,000; ending inventory = $50,000. Compute the inventory turnover ratio and days to sell.
Turnover = 600,000 / 60,000 = 10 times; Days to sell = 365 / 10 = 36.5 days
300
AR = $100,000 and Allowance = $6,000. The company writes off a $1,500 customer account. What happens to NET accounts receivable and to net income?
No effect on either. Net AR stays $94,000 (before: 100,000 - 6,000; after: 98,500 - 4,500)
300
The bank statement shows a $350 NSF check from a customer. Give the company's journal entry.
Dr. Accounts Receivable 350; Cr. Cash 350
400
A $482 check paying an account payable was recorded in the books as $428. What is the adjustment on the reconciliation and the journal entry?
Deduct $54 from the BOOK balance. Dr. Accounts Payable 54; Cr. Cash 54
400
Perpetual, gross method: bought $5,000 of inventory on terms 2/10, n/30, returned $800, then paid within the discount period. Give the payment entry.
Dr. Accounts Payable 4,200; Cr. Inventory 84; Cr. Cash 4,116
400
200 units have a cost of $15 each and a net realizable value of $12 each. Prepare the LCM/NRV entry.
Write-down = 200 x $3 = $600. Dr. Cost of Goods Sold 600; Cr. Inventory 600
400
The aging schedule says the Allowance should have a $9,000 ending balance. Before adjusting, the Allowance has a $1,200 DEBIT balance. What is Bad Debt Expense?
$10,200 ($9,000 + $1,200). Dr. Bad Debt Expense 10,200; Cr. Allowance 10,200
400
Using the allowance method, write off a $2,000 customer account as uncollectible.
Dr. Allowance for Doubtful Accounts 2,000; Cr. Accounts Receivable 2,000
500
Balance per bank $8,400; per books $8,460. Deposit in transit $900; outstanding checks $1,250; service charge $30; NSF check $420; interest earned $40. What is the correct (up-to-date) cash balance?
Seller (gross method): goods costing $3,000 sold for $5,000 on terms 3/10, n/30. Customer returns $1,000 of goods (cost $600), then pays within the discount period. Compute NET SALES and GROSS PROFIT.
Perpetual system: Beginning 50 units @ $10; bought 100 units @ $12; sold 120 units; then bought 60 units @ $14. Compute COGS under FIFO and under LIFO.
A $40,000, 9%, 6-month note receivable is issued on October 1. Year-end is December 31. Compute accrued interest at Dec 31 and total cash collected at maturity.
Accrued interest = 40,000 x 9% x 3/12 = $900. Cash at maturity (April 1) = $40,000 + $1,800 = $41,800
500
A $10,000, 12% note receivable was issued on September 1. Record the interest accrual at December 31.
10,000 x 12% x 4/12 = $400. Dr. Interest Receivable 400; Cr. Interest Revenue 400
600
During the reconciliation you find: (1) a $1,260 customer payment on account was recorded in the books as $1,620, and (2) the bank collected a $500 EFT from a customer. Give the book-side adjustments and journal entries.
Deduct $360 error; add $500 EFT. Dr. Accounts Receivable 360, Cr. Cash 360; Dr. Cash 500, Cr. Accounts Receivable 500
600
Supplier A: $400, terms 2/10, n/30, FOB shipping point, freight $30. Supplier B: $420, terms 3/10, n/30, FOB destination, freight $25. You pay within the discount period. What is the actual cost from each, and which is cheaper?
A = $392 + $30 = $422. B = $420 x 97% = $407.40 (seller pays freight). Supplier B is cheaper
600
Perpetual WEIGHTED AVERAGE: Beginning 40 units @ $5; bought 60 units @ $6; sold 70 units; then bought 20 units @ $8. Compute COGS and ending inventory.
Aging: 0-30 days $50,000 @ 2%; 31-60 days $10,000 @ 10%; over 60 days $4,000 @ 30%. The Allowance has a $1,500 CREDIT balance before adjusting. Compute Bad Debt Expense and net AR.
Required allowance = 1,000 + 1,000 + 1,200 = $3,200. Bad Debt Expense = $1,700. Net AR = $64,000 - $3,200 = $60,800
600
A $20,000, 6%, 6-month note issued Oct 1 is collected at maturity on April 1. $300 of interest was accrued at Dec 31. Give the entry on April 1.