ACC 201 Module 4 Exam 2 - Chapters 4, 5 & 7 (2014)

$200

$1,564

$1,568

$1,600

$1,800

Are required by the FASB.

Contain more detail than a simple listing of revenues and expenses.

Are required for the perpetual inventory system.

List cost of goods sold as an operating expense.

Can only be used in perpetual inventory systems.

Requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting.

Requires a company to use one method of inventory valuation exclusively.

Requires that all companies in the same industry use the same accounting methods of inventory valuation.

Is also called the full disclosure concept.

Is also called the matching concept.

Is used to analyze profitability.

Is used to measure solvency.

Measures how quickly a company turns over its merchandise inventory.

Validates the acid-test ratio.

Calculation depends on the company's inventory valuation method.

$304

$296

$288

$280

$276

A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger.

A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger.

A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable ledger.

A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable ledger.

A credit to Sales and a credit to the customer's account in the accounts receivable ledger.

Is the day of the credit sale.

Is the day the note was signed.

Is the day the note is due to be paid.

Is the date of the first payment.

Is the last day of the month.

0.20

5.00

20.0

73.0

1,825

Direct write-off method.

Aging of accounts receivable method.

Percent of sales method.

Aging of investments method.

Percent of accounts receivable method.

10.The following supplementary records summarize Tosca Company’s merchandising activities for year 2013.

Cost of merchandise sold to customers in sales transactions

$

207,000

Merchandise inventory, December 31, 2012

30,056

Invoice cost of merchandise purchases

212,216

Shrinkage determined on December 31, 2013

820

Cost of transportation-in

2,122

Cost of merchandise returned by customers and restored to inventory

2,050

Purchase discounts received

1,698

Purchase returns and allowances

3,700

Record the summarized activities in the T-accounts below.

11.Laker Company reported the following January purchases and sales data for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

340

units

@ $10.80

=

$

3,672

Jan.

10

Sales

185

units

@$18.80

Jan.

20

Purchase

410

units

@ $9.80

=

4,018

Jan.

25

Sales

335

units

@$18.80

Jan.

30

Purchase

280

units

@ $8.80

=

2,464

Totals

1,030

units

$

10,154

520

units

Laker uses a perpetual inventory system. For specific identification, ending inventory consists of 510 units, where 280 are from the January 30 purchase, 80 are from the January 20 purchase, and 150 are from beginning inventory.

1.

Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $3,500, and that the applicable income tax rate is 35%.(Do not round your Intermediate calculations.)

2.

Which method yields the highest net income?

3.

Does net income using weighted average fall between that using FIFO and LIFO?

4.

If costs were rising instead of falling, which method would yield the highest net income?

12.At year-end (December 31), Chan Company estimates its bad debts as 0.20% of its annual credit sales of $819,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the $410 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.

Prepare the journal entries of Chan to record these transactions and events of December 31, February 1, and June 5.

13.Following are selected transactions Dulcinea Company for 2012.

Dec.

13

Accepted a $25,000, 45-day, 6% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.

31

Prepared an adjusting entry to record the accrued interest on the Lee note.

First, complete the table below to calculate the interest amounts at December 31^st.(Do not round your intermediate calculations. Use 360 days a year.)

Use the calculated value to prepare your journal entries.