1) The entries to record a $5,000 cash sale under a periodic inventory system, when the
cost of the merchandise is $3,200, include a:
A) debit to Inventory for $5,000
B) credit to Sales Revenue for $5,000
C) debit to Cost of Goods Sold for $3,200
D) debit to Accounts Receivable for $5,000
2) Which of the following is included in the category Other receivables?
A) Loans to employees
B) Accounts receivables
C) Notes receivables
D) Investments
3) Assuming Charlton Company has the following December 31 year end account
balances:
Cash and Cash equivalents would be reported on the Balance Sheet as:
A) $2,450
B) $5,650
C) $250
D) $8,350
4) Jan-Con Company provides the following information for the month of August.
Required:
(a)What is the value of the ending inventory assuming the company uses a periodic
inventory system and the weighted-average method?
(b)What is the cost of goods sold if the company uses a perpetual inventory system and
the FIFO method of valuing inventory?
(c)What is the cost of goods sold if the company uses a perpetual inventory system and
the weighted average method of valuing inventory?
5) The income summary account is closed to the:
A) cash account
B) withdrawals account
C) service revenue account
D) capital account
6) One scheme for using inventory to increase reported income is to:
A) overstate ending inventory
B) understate ending inventory
C) overstate cost of goods sold
D) overstate purchases
7) Table 10-4
Golden Miners purchased a mine in 2013 for $960,000. It was estimated that the mine
contained 3,000,000 tonnes of ore, and would be totally worthless once all ore was
extracted. Golden Miners extracted 250,000 tonnes in 2013 and 300,000 tonnes in 2014
.
Refer to Table 10-4. Assuming 500,000 tonnes are extracted in 2015, the book value of
the mine on January 1, 2016, would be:
A) $624,000
B) $336,000
C) $160,000
D) $800,000
8) To update the inventory records for the sale of merchandise under a perpetual
inventory system, the entry would include a:
A) credit to Inventory
B) debit to Accounts Payable
C) debit to Sales Revenue
D) credit to Cost of Goods Sold
9) A critical element of internal control over collections of accounts receivable is:
A) the separation of cash-handling and cash-accounting duties
B) setting up a petty cash account
C) using a cheque-writing machine
D) depositing the cash from the cash register on a daily basis
10) Table 10-2
On January 1, 2013, Homes Realty Ltd. purchased a $45,000 vehicle to chauffeur
clients to prospective homes. Homes plans on driving the vehicle for five years or
100,000 kilometres. Expected residual value is $10,000.
Referring to Table 10-2, the 2013 amortization expense using the straight-line method
is:
A) $11,250
B) $8,750
C) $2,500
D) $7,000
11) Table 11-6
Peter Tomach works for a manufacturing company. He earns $600 a week for a 40-hour
week and time and a half for anything over 40 hours per week. During the first week of
the year, Peter worked 49 hours. The income tax withholdings are 15% of gross
earnings. Canada Pension Plan deductions are 4.95% of gross earnings and
Employment Insurance deductions are 1.83% of gross earnings. Ignore the basic
Canada Pension Plan exemption.
Referring to Table 11-6, the entry to record the payroll costs imposed on the employer
would include a:
A) debit to Canada Pension Plan Expense of $39.72
B) credit to Employee Income Tax Payable for $120.38
C) debit to Salary Expense for $600
D) credit to Employment Insurance Payable for $15.01
12) The measure of how quickly an item can be converted to cash is referred to as:
A) leverage
B) solvency
C) profitability
D) liquidity
13) Cost of goods sold is $108,000, beginning inventory is $20,000 and purchases is
$100,000. What is ending inventory?
A) $32,000
B) $12,000
C) $128,000
D) $102,000
14) Table 5-4
The following data is for the Atlantis Merchandising, which uses a periodic inventory
system:
Refer to Table 5-4. Net purchases for Atlantis Merchandising are:
A) $415,000
B) $357,000
C) $396,000
D) $376,000
15) Given the following data, what is the cost of ending inventory rounded to the
nearest whole dollar using periodic FIFO?
A) $400
B) $360
C) $890
D) $850
16) Mars Company purchased $2,500 of merchandise on account, terms 3/10 n/60. If
payment was made within the discount period, the entry to record the payment under a
perpetual inventory system would include a credit to:
A) Cash of $2,425
B) Inventory of $2,352
C) Accounts Payable of $2,400
D) Cash for $2,400
17) Match the following terms and definitions:
A) account receivable
B) proprietorship
C) earnings estimate
D) transaction
E) generally accepted accounting principles
F) corporation
G) asset
H) expense
I) accounting
J) liability
K) limited-liability partnership
L) revenue
M) capital
Guidelines that govern how businesses report their financial statements to the public
18) On December 31, the assets of a business include: Cash, $3,500, Accounts
Receivable, $14,000, and Supplies, $1,050. The liabilities on December 31 total $7,600.
The owner’s equity on December 31 is:
A) $18,550
B) $25,100
C) $10,950
D) $11,100
19) If total liabilities are $98,000 and owner’s equity is $150,000, total assets would be:
A) $52,000
B) $248,000
C) $98,000
D) $300,000
20) The copying of amounts from the journal to the appropriate ledger accounts is
referred to as:
A) verifying
B) journalizing
C) posting
D) balancing
21) Perkins issued a $500 credit memo to a customer, Susan Richardson, for inventory
that Richardson returned because it was not what she had ordered. What entry does
Richardson make assuming her company using a periodic inventory system?
A)
B)
C)
D)
22) Table 7-8 Nordin Avionics
J. Nordin Avionics began business on January 1, 2013 . The business was started with
$10,000 in the cash account and $30,000 of inventory in stock. Nordin uses a sales
journal to record credit sales and a cash receipts journal to record all cash receipts,
including both cash sales and cash collections of credit sales. At the end of January, the
two journals appeared as follows:
Sales Journal
Cash Receipts Journal
Refer to Table 7-8 at the end of January, what was the balance in the subsidiary account
receivable for A. Reed?
A) $9,200 credit balance
B) $3,200 debit balance
C) $5,000 credit balance
D) $3,200 credit balance
23) Gere Company returned defective supplies to a supplier and received a cash refund.
Assuming the use of special journals, this entry would be recorded in the:
A) sales journal
B) cash payments journal
C) cash receipts journal
D) general journal
24) When the FIFO method is used, ending inventory is assumed to consist of the:
A) oldest units
B) most recently purchased units
C) units with the highest per unit cost
D) units with the lowest per unit cost
25) Prepare adjusting entries for the following items on December 31, the end of the
fiscal year for Carson Carpets. The company initially records cash received in advance
of performing the service as a liability, and prepaid expenses as current assets.
a) Amortization on equipment, $2,500
b) Services performed but unbilled, $3,500
c) Salaries owed to employees at year end, $2,500
d) Unearned service revenue earned, $5,500
e) Supplies used during the year, $3,200
f) Prepaid rent expired during the year, $7,500
26) At January 1, Everbright Sales has the following balances:
During the year, Everbright has $150,000 of credit sales, collections of $140,000, and
write-offs of $3,000. Everbright records bad debt expense at the end of the year using
the aging method. At the end of the year, the aging analysis produces a figure of $1,900,
being the estimate of uncollectible accounts at end of year.
Required:
1>What is the December 31 journal entry to record the bad debts expense?
2>Present the Everbright accounts receivable in a partial balance sheet at December
31st.
27) Explain the accounting for warranties. Be specific and include in your discussion
the principle or objective that governs the accounting method.
28) Accrued liabilities
29) Given the following adjusted trial balance for Leighton Industries, prepare a
postclosing trial balance dated December 31, 2014 .
Leighton Industries
Adjusted Trial Balance
December 31, 2014
DebitCredit
Cash$ 13,000
Accounts receivable7,000
Prepaid rent3,000
Prepaid insurance3,500
Supplies3,300
Land32,000
Building55,000
Accumulated amort.-building$ 12,000
Equipment36,000
Accumulated amort.-equipment9,000
Accounts payable8,000
Salary payable2,000
Interest payable2,500
Mortgage payable (due 12/31/2019)55,000
Leane Leighton, Capital70,500
Leane Leighton, Withdrawals25,000
Service revenue96,000
Salary expense34,000
Insurance expense1,200
Rent expense1,800
Utilities expense16,000
Advertising expense2,000
Amortization expense-building11,000
Amortization expense-equipment10,000
Supplies expense 1,200________
Total$255,000$255,000
Calculate the current ratio and the debt ratio for Leighton Industries. Explain what these
two ratios measure and whether it is usually preferable to have a higher or lower ratio
for each.
30) During October, Fitness Plans had the following transactions:
Oct. 3Purchased inventory from Laser Outfitters for cash, $1,050.
5Purchased inventory from Health Foods for $1,500 cash.
9Purchased $500 of supplies for cash.
10Purchased equipment for cash, $330.
17Made a $50 payment on a note payable.
25Received and paid utility bill, $275.
30Owner withdrew $1,000 for personal use.
30Paid R. D. Manning, a creditor, $500 on account.
Record the above transactions in the cash payments journal.
Cash Payments Journal
31) Tobermory Merchandising had the following transactions during May:
May 5Purchased $2,700 of merchandise on account, terms 3/15 n/60,
FOB shipping point.
9Paid transportation cost on the May 5 purchase, $250.
10Returned $400 of defective merchandise purchased on May 5 .
15Paid for the May 5 purchase, less the return and the discount.
Required: Assuming the periodic inventory system is used, prepare the journal entries to
record the above transactions.
32) Engle Enterprises reports net sales revenue for 2013 to be $595,000, January 1,
2013 inventory at $102,000, net purchases at $370,000, and operating expenses at
$155,000. Under FIFO, December 31, 2013, inventory would be valued at $96,700.
Compute net income for 2013 .