9.
Jot Construction Company uses the percentage-of-completion method of
accounting. In 2013, Jot began work on a contract it had received which
provided for a contract price of $6,000,000. Additional information related
to the project includes: costs incurred during the year were $1,400,000;
estimated costs to complete as of December 31, 2013 were $2,100,000. What
amount should Jot recognize as gross profit for the project in 2013?
$700,000
$1,000,000
$1,500,000
$2,500,000
10.
Swift Builders, Inc. uses the completed-contract method of accounting for a
$450,000 contract that it expects will take two years to complete. At
December 31, 2013, the end of the first year of the contract, additional
information related to the project includes: costs incurred to date were
$290,000; estimated costs to complete were $180,000; billings to date were
$325,000; collections to date were $300,000. What amount should Swift
recognize as gross profit or loss for 2013?
$
-0-
a
$20,000 loss
a
$40,000 loss
a
$110,000 loss
11.
Miller Company appropriately uses the installment method of accounting to
recognize income in its financial statements. Pertinent data relating to
this method of accounting includes: installment sales totaled $400,000 for
2013 and $500,000 for 2014; cost of sales were $260,000 for 2013 and
$300,00 for 2014; in 2013 Miller collected $280,000 from 2013 sales; in
2014 Miller collected $100,000 from 2013 sales and $300,000 from 2014
sales. What amount should Miller report as realized gross profit on the
2014 income statement?
$155,000
$120,000
$98,000
$35,000
12.
In a consignment sale, the consignor (Points : 6)
does
not show the merchandise as an asset on its books.
recognizes
revenue only after receiving notification of sale and the cash remittance
from the consignee.
recognizes
revenue when it ships merchandise to the consignee.
periodically
prepares an "account report" for the consignee.
13.
If Collier Costumes, Inc. has the following items at year-end, how much
should it report as cash on the balance sheet?
Cash in bank
$25,700
Cash on hand
$620
Post-dated checks
$1,680
Certificates of deposit
$80,000
$80,000
$28,000
$26,320
$620
14.
At December 31, 2013, Vega Vacuum Corporation has cash in bank of 38,500,
restricted cash in a separate account of $9,000, and a bank overdraft at
another bank of $750. How much should it report as cash on the balance
sheet?
$38,500
$29,500
$37,750
$46,750
15.
Which of the following is not classified as cash on the
balance sheet? (Points : 6)
Postage
stamps
Post-dated
checks
Cash
restricted for plant expansion
All
of the above
16.Corresponds
to CLO 4(d)
The month-end bank statement for Guthrie Motors shows a balance of $152,000
and a bank service charge of $40. Outstanding checks are $35,000, a deposit
of $10,000 was in transit at month end, and a check for $1,500 was
erroneously charged by the bank against the account. The correct balance in
the bank account at month end is (Points : 6)
$125,000
$125,460
$128,500
$128,460
17.Corresponds
to CLO 5(a)
As of December 31, Gammelguard Corporation has outstanding accounts
receivable of $1.5 million. Sales on credit during the year were $9
million. The allowance for doubtful accounts has a credit balance of $20,000.
If the company estimates that 9% of its outstanding receivables will be
uncollectible, what will be the amount of bad debt expense recognized for
the year? (Points : 6)
$115,000
$135,000
$155,000
$810,000
18.Corresponds
to CLO 5(b)
As of December 31, Wiliams Corporation has outstanding accounts receivable
of $3.6 million. Sales on credit during the year were $12.5 million. The
allowance for doubtful accounts has a credit balance of $62,000. If the
company estimates that 1% of its net credit sales will be uncollectible,
what will be the amount of bad debt expense recognized for the year?
(Points : 6)
$63,000
$125,000
$187,000
$360,000
19.Corresponds
to CLO 5(c)
Kandris Corporation had a balance in accounts receivable of $450,000 and a
balance in allowance for doubtful accounts of $34,000, when management
decided the accounts receivable from Dunn Corporation of $1,800 had become
uncollectible. What journal entry should Kandris Corporation make to
write-off the uncollectible account? (Points : 6)
Debit
Allowance for Doubtful Accounts, credit Accounts Receivable, $1,800
Debit
Allowance for Doubtful Accounts, credit Bad Debt Expense, $1,800
Debit
Bad Debt Expense, credit Allowance for Doubtful Accounts, $1,800
Debit
Accounts Receivable, credit Allowance for Doubtful Accounts, $1,800
20.Corresponds
to CLO 5(d)
At December 31, Norman Industrial Inc. had account balances before year-end
adjusting entries for accounts receivable and the related allowance for
doubtful accounts of $850,000 and $79,000 respectively. An aging of
accounts receivable indicated that $88,000 of December 31, receivables are
expected to be uncollectible. The net realizable value of accounts
receivable after adjustment is (Points : 6)
$938,000
$929,000
$771,000
$762,000
21.Corresponds
to CLO 6(a)
The following is a record of Axis Corporation's inventory transactions for
the current month:
June 1
Balance, 300 units @ $65 each
June 16
Sale, 400 units @ $90
June 14
Purchase 800 units @ $68 each
June 20
Sale, 500 units @ $90
June 25
Purchase 250 units @ $70
Axis uses the periodic inventory
system. Using the FIFO method, what is the amount of cost of goods sold for
the month?
(Points : 6)
$61,700
$60,300
$58,500
$31,100
22.Corresponds
to CLO 6(b)
The following is a record of Meyer Corporation's inventory transactions for
the current month:
October 1
Balance, 500 units @ $24 each
October 9
Sale, 500 units @ $51
October 12
Purchase 900 units @ $26 each
October 19
Sale, 800 units @ $51
October 25
Purchase 600 units @ $27 each
Meyer uses the periodic
inventory system. Using the LIFO method, what is the amount of ending
inventory on October 31?
(Points : 6)
$18,900
$16,800
$34,600
$17,200
23.Corresponds
to CLO 6(c)
The following is a record of Tiller Corporation's inventory transactions
for the current month:
January 1
Balance, 500 units @ $10 each
January 5
Sale, 290 units @ $25
January 11
Purchase, 300 units @ $12 each
January 13
Sale, 250 units @ $25
January 23
Purchase, 400 units @ $13 each
January 27
Sale, 310 units @ $25
Tiller uses the periodic inventory
system. Using the weighted-average inventory method, what is the cost
of goods sold for the month of January?
(Points : 6)
$14,004
$9,775
$4,085
$4,025
24.Corresponds
to CLO 6(d)
The following is a record of Caulder Corporation's inventory transactions
for the current month:
March 1
Balance, 500 units @ $40 each
March 12
Sale, 200 units @ $85
March 16
Purchase, 300 units @ $42 each
March 22
Sale, 350 units @ $85
March 28
Purchase, 300 units @ $43 each
Caulder uses the perpetual inventory
system. Using the LIFO method, what is the ending inventory on
March 31?
(Points : 6)
$22,900
$22,100
$22,600
$23,400
25.Corresponds
to CLO 7(a)
In the context of dollar-value LIFO, when inventory in base year dollars
increases, (Points : 6)
The
LIFO reserve decreases
The
LIFO price index increases
A
LIFO layer is created
A
LIFO layer is liquidated
26.Corresponds
to CLO 7(b)
Hemmer Corporation adopted the dollar-value LIFO method of inventory
valuation on December 31, 2011. Its inventory at that date was 450,000 and
the relevant price index was 100. Information regarding inventory for
subsequent years is as follows:
Date
Inventory at Current Prices
Current Price Index
December 31, 2012
$513,600
107
December 31, 2013
$580,000
125
December 31, 2014
$650,000
130
What is the ending
inventory at December 31, 2012 under
dollar-value LIFO?
(Points : 6)
$464,000
$464,980
$482,100
$497,080
27.Corresponds
to CLO 7(c)
What is primary purpose of stating inventories at lower-of-cost-or-market?
(Points : 6)
To
report a loss when there is a decrease in the future utility below the
original cost
To
be conservative
To
report a loss whenever there is a decrease in the future utility
To
permit future profits to be recognized
28.Corresponds
to CLO 7(d)
If the historical cost of product X is $64, the selling price of product X
is $90, the costs to sell product X are $14, the replacement cost for
product X is $55, and the normal profit margin is 30% of sales price, what
is the market value that should be used in the lower-of-cost-or-market
comparison? (Points : 6)
$64
$49
$76
$55
29.Corresponds
to CLO 8(a)
Energy Solutions Corporation estimates the cost of its physical inventory
at November 30 for use in an interim financial statement. Management uses a
gross profit rate on sales of 40%. The following information is available:
Inventory, November 1
$500,000
Purchases during November
$650,000
Sales during November
$900,000
The estimated cost of inventory at
November 30 is
(Points : 6)
$360,000
$540,000
$610,000
$650,000
30.Corresponds
to CLO 8(b)
Which of the following is not a basic assumption of the
gross profit method of estimating inventory? (Points : 6)
The
beginning inventory plus the purchases equal total goods to be accounted for.
Goods
not sold must be on hand.
The
sales, reduced to cost, deducted from the sum of the opening inventory plus
purchases, equal ending inventory.
The
total amount of purchases and the total amount of sales remain relatively
unchanged from the comparable previous period.
31.Corresponds
to CLO 8(c)
Arrow Corporation uses the conventional retail inventory method to value
its merchandise inventory. The following information is available for the
current year:
Cost
Retail
Beginning Inventory
$30,000
$50,000
Purchases
$180,000
$250,000
Freight-In
$2,500
----
Net Markups
$8,500
Net Markdowns
$10,000
Employee Discounts
$1,000
Sales
$205,000
What is the cost to retail ratio?
(Points : 6)
68.88%
68.07%
70.35%
70.83%
32.Corresponds
to CLO 8(d)
Capital City Corporation uses the conventional retail inventory method to
determine its ending inventory at cost. The following information is
available for the current year:
Cost
Retail
Beginning Inventory
$300,000
$420,000
Purchases
$1,450,000
$2,000,000
Net Markups
$80,000
Net Markdowns
$30,000
Sales
$1,900,000
Capital City determines that
the cost-to-retail ratio is 70%. What is the ending inventory at
cost?
Solution: 24_Accounting MCQs