87.
Which of the following correctly describes the following journal entry?
Cash
xxx
Sales discounts
xxx
Accounts receivable
xxx
88.
Which of the following does not correctly describe the following journal entry?
Sales returns and allowances
xxx
Accounts receivable
xxx
89.
The Ward Company has provided the following information:
• Net sales totaled $750,000.
• Beginning net accounts receivable was $65,000.
• Ending net accounts receivable was $85,000.
What was Ward’s receivables turnover ratio?
90.
The Ward Company has provided the following information:
• Net sales totaled $750,000.
• Beginning net accounts receivable was $65,000.
• Ending net accounts receivable was $85,000.
What was Ward’s average collection period?
91.
The Rye Corporation has provided the following information:
• Total sales were $1,200,000.
• Beginning net accounts receivable was $45,000.
• Ending net accounts receivable was $65,000.
• Sales returns and allowances totaled $100,000.
What was Rye’s receivables turnover ratio?
92.
The Rye Corporation has provided the following information:
• Total sales were $1,200,000.
• Beginning net accounts receivable was $45,000.
• Ending net accounts receivable was $65,000.
• Sales returns and allowances totaled $100,000.
What was Rye’s average collection period?
93.
Which of the following transactions will result in a decrease in the receivable turnover ratio?
94.
Which of the following transactions will result in an increase in the receivables turnover ratio?
95.
Which of the following statements is correct?
96.
Which of the following does not correctly describe the effect of recording a credit sale of
inventory for a profit?
97.
The Soft Company has provided the following information after year–end adjustments:
• Allowance for doubtful accounts was $11,000 at the beginning of the year and $30,000 at
the end of the year.
• Accounts receivable were $80,000 at the beginning of the year and $420,000 at the end of
the year.
• Accounts written off as uncollectible totaled $20,000.
• Net sales totaled $2,700,000.
• Sales discounts were $100,000.
What was the amount of Soft’s bad debt expense for the year?
98.
The Tanner Company has provided the following information after year-end adjustments:
• Allowance for doubtful accounts increased $19,000.
• Accounts receivable increased $390,000 during the year.
• Accounts written off as uncollectible totaled $20,000.
• Sales totaled $2,500,000.
• Sales discounts were $100,000.
What was the amount of Tanner’s net sales?
99.
Redwing Company sold inventory costing $500 to a customer on account for $700. Which of
the following correctly describes the collection of $686 cash when the customer takes
advantage of a sales discount?
100.
Redwing Company sold inventory costing $500 to a customer on account for $700. Which of
the following does not correctly describe the collection of $686 cash when the customer takes
advantage of a sales discount?
101.
Sabre Company sold inventory costing $600 to a customer on account for $900 with terms of
3/15, n/30. Which of the following is not correct?
102.
One of Hawk Company’s customers returned products that cost Hawk $300, which was sold
on account for $450. Which of the following does not correctly describe the effect of the
return on the financial statements?
103.
One of Trent Company’s customers returned products that had been sold on account for $800.
Which of the following correctly describes the effect on the financial statements of the
return?
104.
Which of the following transactions does not affect gross profit?
105.
Which of the following is not a component of the gross profit calculation?
Essay Questions
106.
The following data were taken from the records of Lilo Corporation for the year ended
December 31, 2016 before any adjustment for bad debt expense:
Sales of merchandise for cash
$150,000
Sales of merchandise on credit
800,000
Sales returns and allowances
10,000
Sales salaries expense
80,000
Cost of sales
610,000
Administrative expenses
90,000
The following items have not been included in above amounts:
Estimated bad debt expense is 1% of credit sales.
The income tax rate is 35%.
10,000 of shares of common stock are outstanding.
Required:
A. Calculate the bad debt expense.
B. Prepare a multiple-step income statement (including gross profit, income before income
taxes, and earnings per share).
Net sales
Less: Cost of sales
107.
A portion of the income statement for Oscar Company is shown below. Provide the missing
account titles and amounts.
A.
_______________________
$350,000
Sales returns and
allowances
B.
________
C.
_______________________
$348,000
D.
_______________________
________
Gross profit
$90,000
108.
A portion of the income statement for Lone Star Company is shown below. Provide the
missing account titles and amounts.
A.
_______________________
$380,000
Sales discounts
20,000
Net sales
B.
________
Cost of sales
$100,000
C.
_______________________
D.
________