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FINANCIAL ACCOUNTING Quiz 4

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Question;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......................................................................................................................;H;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...............................................................;F;0.;C;0.;1?2. Sold;merchandise on account........................................................................;1.;2.;3?4. Received;a return of part of the merchandise sold in Question 1?2.......;3.;4.;5?6. Received;cash for merchandise sold in Questions 1?2 and 3?4 within the discount period...........................................................................................;5.;6.;7?8. Purchased;merchandise on account............................................................;7.;8.;9?10. Returned;part of the merchandise purchased in Question 7?8...............;9.;10.;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........................;report form;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?............................................................................................................;current;assets;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.................;$700;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#50147 | Written in 18-Jul-2015

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