Chapter 5 (Recievables)
Chapter 6 (Inventory)
Chapter 7 (Long Term Assets)
Vocab/Conceptual
Misc
100
On April 25, Foreman Electric installs wiring in a new home for $3,500 on account. However, on April 27, Foreman's electrical work does not pass inspection. The customer complains, and Foreman reduces the invoice by $600. On April 30, the customer makes full payment of the balance. What is the journal entry on April 27?
(Debit) Sales Allowance $600
(Credit) Cash $600
What kind of account is Sales Allowance?
[Also, recognize and know the JE for Trade Disc, Sales Disc, Sales Return.]
100
What is the definition of inventory?*
Short-term / current assets that company intends to sell to customers during normal business operations
100
Which of the following expenditures should be capitalized?
Multiple Choice
A)
An improvement to a tangible asset.
B)
Ordinary repairs and maintenance.
C)
Research and development costs.
D)
Unsuccessful legal defense of an intangible asset.
(Every team can answer +/-100)
A
100
What account refers to the seller reducing the customer’s balance owed because of some deficiency in the company’s product or service?
Sales Allowance
100
Gross Profit, Operating Income, Income Before Taxes, Net Income
T/F The four levels of profitability in a multi-step income are...
Which level of profitability best fits...
200
On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What amount would Fox record as revenue on March 17?
March 17 = Revenue credited $12,000
March 23 = Sales Discount debited $240
= Net revenue: $11,760
200
At the beginning of the year, Bennett Supply has inventory of $3,500. During the year, the company purchases an additional $12,000 of inventory. Cost of Goods Sold for the year is $11,500. What is the ending balance at the end of the year for inventory account?*
$4,000
What amount will Bennett report for cost of goods sold?*
200
Brazilian Bakery purchases land, building, and equipment for a single purchase price of $320,000. However, the estimated fair values of the equipment, land, and building are $84,000, $189,000, and $147,000.
What are the amounts the company should record for the land, the building, and the equipment?
Equipment $64,000
Land $144,000
Building $112,000
200
Under the allowance method, companies estimate ______ uncollectible amounts and report those estimates in the ______ year.
(Every team can answer +/- 200)
Future, current
200
T/F (+/- 200, 100, 50)
Notes Receivables are current assets created by a formal written credit arrangement which the company is entitled to receive.
300
On August 1, 2027, Nees Manufacturing lends $10,000 to Roberson Supply using a 9% note due in 9 months. Nees has a December 31 year-end. April 30th 2028, Roberson pays the full amount, including the interest. What is the amount of interest revenue recognized in 2027 and in 2028?
(Hint?)
2027 $375
2028 $300
(Try writing down the formulas before you do the work)
300
Bingerton Industries began the year with an inventory of $85,000. On January 5th, they purchased $310,000 worth of inventory on account. On January 10th, Inventory costing $335,000 was sold on account for $520,000. Based on the perpetual inventory system, what is the journal entry(s) on January 10th for the sale of inventory?
#1
(Debit)Accounts Receivable $520,000
(Credit) Sales Revenue $520,000
#2
(Debit) COGS $335,000
(Credit) Inventory $335,000
300
University Car Wash purchased new soap dispensing equipment on January 1 that cost $270,000, including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. The first year it was used for 3100 hours, the second 1100 hours.
Using the Activity-based method, what is the net amount of equipment in the balance sheet after year 2?
$183,900*
Straight Line, Double-Decline, Activity-Based
Depreciation Expense (Yr 1 or 2), Accumulated Depreciation, Net Equipment
300
Double Jeopardy
If at the end of the year Allowance for Uncollectible Accounts has a credit balance before any adjusting entries, what does that tell us about last year's estimate?
Bonus points if you can explain your reasoning (+100)
300
(T/F) (+/- 300, 200, 100)
During periods of rising costs, LIFO generally results in a higher COGS.
Ex:*
400
(Double Jeopardy)
On December 31 before adjusting entries, a company reports the following balances:
• Accounts Receivable $100,000
• Allowance for Uncollectible Accounts $2,000 (debit)
The company estimates bad debts to be 20% of accounts receivable. The adjusting entry*
would include:
A. A debit to Bad Debt Expense for $22,000
B. A credit to Allow. for Uncollectible Accts for $18,000
C. A credit to Allow. for Uncollectible Accts. for $20,000
D. A debit to Bad Debt Expense for $20,000
400
Using Weighted Avg, what is the Ending Inventory?
Hint: Total sold = 24u, Total purchased: 31u
$3068
How do you do FIFO/LIFO?
400
New Deli is in the process of closing its operations. It sold its three-year-old ovens to Sicily Pizza for $341,000. The ovens originally cost $455,000, had an estimated service life of 10 years, had an estimated residual value of $30,000, and were depreciated using straight-line depreciation.
Record (journal entry) the sale of the ovens at the end of the third year.
(Debit) Cash $341,000
(Debit) Accumulated Depreciation $127,500
(Credit) Equipment $455,000
(Credit) Gain $13,500*
400
What effect will a write-off (actual bad debt) have on the accounting equation, using the allowance method for recognizing uncollectible accounts?
(Every team can answer +/- 200)
Net zero
Debit Allowance of Uncollectible Accounts
Credit Accounts Receivable
400
(T/F) (+/- 400, 200, 100)
We report a loss if we sell an asset for less than book value.*
500
Mercy Hospital has the following balances on December 31, 2027, before any adjustment: Accounts Receivable = $70,000; Allowance for Uncollectible Accounts = $1,400 (debit)*. What is the net accounts receivable* after the adjusting entry in the balance sheet, using aging method*?
(Hint?)
$70,000 - $14,150= $55,850
AUA is what kind of account?
(pre-adjusted amount, adjusting entry/ bad debt expense, post adjusted/ end balance, net A/R)
500
May 1st, KSU purchased 100 books on account from Readers Wholesale for $3,300. May 2nd, KSU pays cash for freight costs of $200 on books purchased from Readers. May 10th, KSU returns 20 books to Readers because part of the order is incorrect. What is the journal entry for the return of 20 books?
ACCT 2101 answer:
(Debit) Accounts Payable $660
(Credit) Inventory $660
Advance answer:
It depends
500
What is the balance of the land account, assuming we bought the land for $500,000?*
$500,000+$9,000-$1,100+$3,000= $510,900
* Closing costs such as fees for real estate commissions, title, title insurance.
* Back taxes or other obligations, such as clearing, filling, and leveling the land, or even removing existing buildings to prepare the land for its intended use.
* Selling salvaged building materials reduces the cost of land.
We record a long-term asset at its cost plus all expenditures necessary to get the asset ready for use.*
- subtract salvage materials
- No maintenance cost
- No recurring cost
500
Define or explain a: patent, copyright, trademark, land improvements, goodwill
(+/- 100 for each)
Patent- right to manufacture an idea/product for 20 years
Copyright- right to use an original and creative work
Trademark- right to use a logo, name, or phrase
Land improvement- non-permanent additions to the land
Goodwill- the difference between the fair value of a company and its book value
*+ all the other long-term accounts in Ch 7
500
A company reports the following amounts at the end of the year:
Total revenue $500,000
Sales Discount $50,000
Cost of goods sold $270,000
Net income $60,000
Compute the company's gross profit ratio.
(Hint?)
.4
=Gross profit/ net sales (or net revenue)