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Financial Accounting Assignment 2 1 of 25 The credit term 2/10 n/30 means: that after 10 days 2% interest is charged. that there is a 10% discount if payment is received within 30 days. that there is a 2% discount if payment is received within 10 days. there is a 10% discount if paid immediately and 2% if paid within 30 days. 2 of 25 Family Food Stores purchased canned goods at an invoice price of $3,000 and terms of 2/10, n/30. Half of the goods had been mislabeled and were returned immediately to the supplier.
If Family Food pays the remaining amount of the invoice within the discount period, the amount paid should be: $1,440. $1,470. $2,940. $3,000. 3 of 25 The balance shown on a bank statement is always equal to the month-end balance of a company’s cash account in the general ledger. True False 4 of 25 The allowance for Doubtful Accounts is called a valuation account or contra-asset account and normally has a credit balance. True False 5 of 25 The allowance for Doubtful Accounts is an expense account and appears on the income statement. True False 6 of 25
In a perpetual inventory system, two entries usually are made to record each sale transaction. The purpose of these entries are best described as follows: one entry recognizes the sales revenue, and the other recognizes the cost of goods sold. one entry records the purchase of the merchandise, and the other records the sale. one entry records the cost of goods sold, and the other reduces the balance in the inventory account. one entry updates the general ledger, and the other updates the subsidiary ledgers. 7 of 25 Television Depot is a small retail business that specializes in the sale of top-of-the-line televisions.
This year, the store has begun to carry the Flat TV manufactured by Panasar Co. Thus far this year, Television Depot has recorded the following transactions involving the Flat TV: Jan. 5. Purchased 7 Flat TVs at a unit cost of $1,200 Jan. 18. Purchased 4 additional Flat TVs at $1,200 each Feb. 12. Sold 8 Flat TVs to the Empire Hotel for $13,600 If Television Depot uses a perpetual inventory system, the journal entry to record the sale on February 12th would include all of the following except: a debit to the Cost of Goods Sold for $9,600. credit to Sales Revenue for $13,600. a credit to Purchases for $9,600. a credit to Inventory for $9,600. 8 of 25 Accounts receivable: are usually converted into cash in 30 to 60 days. are relatively liquid assets. usually appear after short-term investments in marketable securities. all of the above 9 of 25 A company that sells a low volume of high-cost merchandise is more likely to use a _____ than is a company that sells a high volume of low-cost merchandise. perpetual inventory system periodic inventory system manufacturing inventory system physical inventory system 0 of 25 Eagle Company’s bank statement showed a balance at May 31 of $301,624. The only reconciling items consisted of a large number of outstanding checks totaling $86,412. At May 31, what balance should Eagle’s Cash account show? $301,624 $215,212 $128,800 some other amount 11 of 25 At the end of January, the unadjusted trial balance of VIP, Inc. , included the following accounts: | Debit| Credit| Sales (80% represent credit sales)| | $400,000| Accounts Receivable| $240,000| | Allowance for Doubtful Accounts| | $700| Refer to the above data.
VIP uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,200. What is the amount of uncollectible accounts expense recognized in VIP’s income statement for January? $6,200 $5,500 $6,900 some other amount 12 of 25 At the end of January, the unadjusted trial balance of VIP, Inc. , included the following accounts: | Debit| Credit| Sales (80% represent credit sales)| | $400,000| Accounts Receivable| $240,000| | Allowance for Doubtful Accounts| | $700| Refer to the above data.
VIP uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 2% of credit sales. What is the amount of uncollectible accounts expense recognized in VIP’s income statement for January? $6,400 $8,000 $8,700 $7,200 13 of 25 The Cash account in the ledger of Triangle Floors shows a balance of $15,267 at September 30. The bank statement, however, shows a balance of $19,700 at the same date. The only reconciling items consist of a bank service charge of $7, a large number of outstanding checks totaling $8,170, and a deposit in transit.
Refer to the above data. What is the amount of the deposit in transit? $4,440 $7,104 $3,730 $4,333 14 of 25 Herbert Corp uses its periodic inventory system and the following information is available: Sales……………………………….. | $31,000| Inventory-Beginning…………….. | 8,000| Inventory-Ending………………… | 7,000| Purchases………………………….. | 23,000| | | Calculate the cost of goods sold: $7,000. $24,000 $23,000. $31,000 15 of 25 On November 1, 2005, Phillip Corporation sold land priced at $600,000 in exchange for a 7%, six-month note receivable.
Refer to the above data. The journal entry made by Phillip to record this transaction on November 1, 2005, includes: a debit to Notes Receivable of $621,000. a debit to Interest Receivable of $21,000. a credit to Interest Revenue of $21,000. a debit to Notes Receivable of $600,000. 16 of 25 Gross profit margin is the dollar amount of gross profit expressed as a percentage of gross sales. True False 17 of 25 Herbert Corp uses its periodic inventory system and the following information is available: Sales……………………………….. | $31,000| Inventory-Beginning…………….. 8,000| Inventory-Ending………………… | 7,000| Purchases………………………….. | 23,000| | | Calculate the gross profit. $7,000 $24,000 $23,000 $31,000 18 of 25 The purpose of establishing a petty cash fund is to: achieve internal control over small cash disbursements not made by check. keep track of expenditures paid out of cash receipts from customers prior to deposit. ensure that the amount of cash in the bank does not become excessive. keep enough cash on hand in the office to cover all normal operating expenses of the business for a period of time. 9 of 25 Wholesalers sell merchandise directly to the public. True False 20 of 25 The Cash account in the ledger of Triangle Floors shows a balance of $15,267 at September 30. The bank statement, however, shows a balance of $19,700 at the same date. The only reconciling items consist of a bank service charge of $7, a large number of outstanding checks totaling $8,170, and a deposit in transit. Refer to the above data. What is the adjusted cash balance in the September 30 bank reconciliation? $7,090 $15,260 $11,530 $11,523 21 of 25
In a _____, the Inventory and Cost of Goods Sold accounts are kept up-to-date throughout the accounting period. perpetual inventory system periodic inventory system manufacturing inventory system physical inventory system 22 of 25 On November 1, 2005, Phillip Corporation sold land priced at $600,000 in exchange for a 7%, six-month note receivable. Refer to the above data. Phillip’s balance sheet at December 31, 2005, includes which of the following as a result of the sale of land on November 1? Notes Receivable of $600,000 and Interest Receivable of $7,000.
Notes Receivable of $621,000 and Interest Receivable of $7,000. Notes Receivable of $600,000 and Interest Receivable of $21,000. Notes Receivable of $600,000 only. 23 of 25 Television Depot is a small retail business that specializes in the sale of top-of-the-line televisions. This year, the store has begun to carry the Flat TV manufactured by Panasar Co. Thus far this year, Television Depot has recorded the following transactions involving the Flat TV: Jan. 5. Purchased 7 Flat TVs at a unit cost of $1,200 Jan. 18. Purchased 4 additional Flat TVs at $1,200 each Feb. 12.
Sold 8 Flat TVs to the Empire Hotel for $13,600 If Television Depot uses a perpetual inventory system, the journal entry to record the purchase on January 18th would include which of the following? A debit to the Purchases account for $4,800. A debit to the Cost of Goods Sold for $4,800. A credit to Inventory for $4,800. A debit to Inventory for $4,800. 24 of 25 A good system of internal control will include all of the following except: preparing a pro-forma financial statement on a monthly basis. separating the handling of cash from the maintenance of accounting records. aking all major payments by check. reconciling bank statements with accounting records. 25 of 25 On November 1, 2005, Phillip Corporation sold land priced at $600,000 in exchange for a 7%, six-month note receivable. Refer to the above data. On May 1, 2006 (maturity date), the note is collected in full by Phillip Corporation. Assuming a fiscal year-end of December 31, Phillip recognizes which of the following in its income statement for 2006 with regard to this note? $621,000 sales revenue $21,000 interest revenue $14,000 interest revenue $7,000 interest revenue