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FINANCIAL ACCOUNTING- Quiz 4

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Question;FINANCIAL ACCOUNTING;Quiz 4;PROBLEM 1?FINANCIAL STATEMENTS;INSTRUCTIONS: Indicate the placement on financial statements;of the items listed below by inserting the appropriate letter or letters in the;Answers column. Assume the use of the multiple-step income statement and the;perpetual inventory system.;STATEMENTS;Income Statement G. Retained Earnings Statement Balance;Sheet;A. Administrative expenses H. Current assets;B. Cost of merchandise sold I. Current liabilities;C. Other expense J. Long-term liabilities;D. Other income K. Stockholders? equity;E. Revenue from sales L. Property, plant, and equipment;F. Selling expenses;For;Scoring;ITEMS APPEARING ON STATEMENTS;Answers;0. Cash......................................................................................................................;0.;1. Merchandise inventory at end of period........................................................;1.;2. Cost of merchandise;sold..................................................................................;2.;3. Sales discounts...................................................................................................;3.;4. Interest expense.................................................................................................;4.;5. Loss on sale of fixed assets.............................................................................;5.;6. Dividends.............................................................................................................;6.;7. Interest receivable..............................................................................................;7.;8. Accumulated depreciation?store equipment..............................................;8.;9. Interest revenue..................................................................................................;9.;10. Retained earnings at end of period................................................................;10.;11. Sales.....................................................................................................................;11.;12. Store supplies expense.....................................................................................;12.;13. Mortgage note payable (payable in 2015)....................................................;13.;PROBLEM 2?ANALYSIS OF TRANSACTIONS;INSTRUCTIONS: For O'Neill's, indicate the accounts to be;debited and credited in recording the selected transactions described below by;inserting the letter designation for the accounts in the appropriate columns.;The perpetual inventory system is used.;ACCOUNTS;A. Accounts Payable E. Merchandise Inventory I. Dividends;B. Accounts Receivable F. Office Supplies J. Sales;C. Cash G. Office Supplies Expense K. Sales Discounts;D. Cost of Merchandise Sold H. Capital Stock L. Sales;Returns and Allowances;For;Scoring;For;Scoring;TRANSACTIONS;Debit;Credit;0. Purchased office supplies for cash..............................................................;1?2. Sold merchandise on account.......................................................................;3?4. Received a return of part of the merchandise sold in;Question 1?2......;5?6. Received cash for merchandise sold in Questions 1?2 and;3?4 within the discount period...........................................................................................;7?8. Purchased merchandise on account............................................................;9?10. Returned part of the merchandise purchased in Question;7?8..............;FILL-IN-THE-BLANK 1?PRINCIPLES AND TERMINOLOGY;INSTRUCTIONS: Complete the following statements by writing;the appropriate words or amounts in the Answers column.;For;Scoring;STATEMENTS;Answers;0....The form of balance sheet with assets, liabilities, and;stockholders? equity listed in a downward sequence is referred to as the.......................;0.;1....The document that the seller sends to the buyer listing;the terms of the sale is called the.................................................................................................;1.;2....The inventory accounting system in which the amount of;inventory on hand can always be determined is called the..............................................;2.;3....The inventory accounting system in which the cost of;the merchandise sold is determined at the end of the accounting period is;called the.......;3.;4....If the purchaser is to assume the cost of delivering;the goods, the terms of the sale are stated as FOB...........................................................................;4.;5....If the seller is to assume the cost of delivering the;goods, the terms of sale are stated as FOB......................................................................................;5.;6?8....A sales invoice for $25,000, terms 2/10, n/30, FOB;shipping point, is paid within the discount period. The seller has prepaid;transportation costs of $125. Purchases of $450 are returned to the;seller......................;6....The amount of the sales discount is...............................................................;6.;7....The title of the account in which the discount is;recorded by the seller is................................................................................................................................;7.;8....The amount of cash received from the customer assuming;payment is not made in the discount period is..................................................................;8.;9....Gross profit is the difference between sales and.........................................;9.;10....If ownership (title) to merchandise passes to the;buyer when merchandise is delivered to the freight carrier, the shipping terms;are..;10.;FILL-IN-THE-BLANK 2?PRINCIPLES AND TERMINOLOGY;INSTRUCTIONS: Complete each of the following statements by;writing the appropriate words in the Answers column.;For;Scoring;STATEMENTS;Answers;0. In which section of the balance sheet is merchandise;inventory reported?...........................................................................................................;0.;1?3. Would a perpetual inventory system normally be;practical for the following types of businesses without a computerized system?;(answer yes or no);1. Retail jewelry store.........................................................................................;1.;2. Wholesale clothing store...............................................................................;2.;3. Retail candy store...........................................................................................;3.;4. If the cost of an item of inventory is $75, the current;replacement cost is $64, and the selling price is $95, the amount included in;inventory;according to the lower of cost or market concept is.................................;4.;5. Merchandise in transit should not be included in the;seller?s inventory if the terms are FOB.......................................................................................;5.;6. The inventory method where the last units purchased are assumed;to be sold and the ending inventory is made up of the first units purchased........................................................................................................;6.;7. A method that is useful for estimating the cost of inventory;that has been destroyed that uses the relationship between cost and retail;value is..............................................................................................................;7.;8. During a period of consistently falling prices, the;method (FIFO or LIFO) that will result in reporting the greater cost of;merchandise sold;is.......................................................................................................................................................................................................................................................;8.;9?11. Inventory at the end of the current fiscal year was;understated. State;whether each of the following will be overstated;understated, or not affected;9. Cost of merchandise sold reported on the income statement;for the;current year......................................................................................................;9.;10. Net income reported on the income statement for the;current year.....;10.;11. Retained earnings reported on the balance sheet at the;end of the current year......................................................................................................;11.;12. Damaged merchandise that can only be sold at below cost;should be;valued at...........................................................................................................;12.;PROBLEM 3?PROBLEMS;INSTRUCTIONS: Solve the following problems and record the;answers in the Answers column.;For;Scoring;Answers;0. The amount credited to sales for the sale of merchandise;costing $500;with 40% added to the cost price to determine selling price;is.................;0.;1. Summarized data on sales and merchandise available for;sale are as follows;April 1 Merchandise inventory........................ $;415,000;April 1?30 Purchases;(net)..................................... 675,000;April 1?30 Sales;(net).............................................. 1,400,000;If the estimated rate of gross profit is 40%, the estimated;cost of the;merchandise inventory on April 30 is..............................................................;1.;2. The following lots of a particular commodity were;available for sale during the year;Beginning;inventory..................................................... 10 units at $61;First purchase................................................................;40 units at $62;Second;purchase......................................................... 35 units at;$65;Third;purchase.............................................................. 15 units;at $63;Based on the periodic system, the total cost of the 23 units;in inventory at the end of the year, according to the first-in, first-out;method, is..........;2.;3. Based on the data in Question 2, the total cost of the 23;units in inventory by the last-in, first-out method is....................................................;3.;4. Based on the data in Question 2, the total cost of the 23;units in inventory by the average cost method is.......................................................;4.;5. A purchase order for $15,000 of merchandise was mailed to;a supplier on December 22, 2011. The merchandise was shipped by the supplier;on December 29, 2011, under terms of FOB shipping point, and;the;merchandise was received on January 3, 2012. If 50% is added;to its;cost by the purchaser to determine selling price, the amount;to be;included in the inventory of the purchaser on December 31;2011, is....;5.;6. Beginning inventory, purchases, and sales of a commodity;are presented below;Inventory: July 1................................................... 15 units at $55;Sales: July 6................................................... 10 units at $57;12................................................... 30;units at $58;22................................................... 40;units at $59;Purchases: July 9................................................... 30 units at $60;18................................................... 50;units at $65;Assuming that the perpetual inventory system is used, the;cost of the;inventory balance on July 31 by the FIFO method is...................................;6.;7. Based on the data in Question 6, the cost of the;inventory balance on July 31 by the LIFO method is..........................................................................;7.;8. Summarized data on sales and merchandise available for;sale are as follows;Cost Retail;June 1 Merchandise inventory $137,000 $210,000;June 1?30 Purchases (net) 252,000 300,000;June 1?30 Sales (net) 350,000;The estimated cost of the merchandise inventory on June 30;by the retail method is...................................................................................................;8.

 

Paper#42505 | Written in 18-Jul-2015

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