On January 1, 2017, Everlight Corp. has the following account balances:Accounts
Receivable
Allowance for Bad Debts
Bad Debts ExpenseDuring the year, Everlight has $155,000 of credit sales, collections
of credit sales of $143,000, and write-offs of $3,300. It records bad debts expense at the
end of the year using the aging-of-receivables method. At the end of the year, the aging
analysis shows that $1,700 is the estimate of uncollectible accounts. Before the
year-end entry to adjust the bad debts expense is made, the balance in the Allowance for
Bad Debts expense is ________.
A) a debit of $2,100
B) a credit of $4,500
C) a zero balance
D) a debit of $3,300
When inventory costs are declining, which of the following inventory costing methods
will result in the highest cost of goods sold?
A) first-in, first-out
B) last-in, first-out
C) weighted-average
D) specific identification
Which of the following is true of the Fair Value Adjustment account for trading
investments?
A) It will always have a credit balance.
B) It will always have a debit balance.
C) It is considered as an adjunct account if it has a credit balance.
D) It is considered as an adjunct account if it has a debit balance.
Businesses record goodwill ________.
A) when they enjoy an outstanding reputation and loyalty with customers
B) if they acquire another company at an amount higher than the market value of its net
assets
C) when they continue the business of an acquired corporation
D) if their market value has increased significantly in the recent years
The following are the current month’s balances for Toys Galore, Inc. before preparing
the trial balance.
What amount should be shown for Common Stock on the trial balance?
A) $39,000
B) $18,000
C) $13,500
D) $23,000
The following information is from the 2017 records of Armand Music Shop:
Bad debts expense is estimated by the percent-of-sales method. Management estimates
that 6% of net credit sales will be uncollectible. Calculate the amount of bad debts
expense for 2017.
A) $10,500
B) $8,040
C) $12,300
D) $9,200
A check payment for $658 was incorrectly entered in the Cash account as $856. Which
of the following adjustments needs to be made?
A) decrease the book balance
B) decrease the bank statement balance
C) increase the book balance
D) increase the bank statement balance
Jelly Bean Company uses the indirect method to prepare its statement of cash flows.
Refer to the following portion of the comparative balance sheet:Jelly Bean Company
Comparative Balance Sheet
December 31, 2017 and 2016
Note:
1. There were no stock retirements during the year.
2. There were no sales of treasury stock during the year.Compute the cash flow from
transactions involving treasury stock.
A) zero net cash flow
B) $4,500 of positive cash flow
C) $4,500 negative cash flow
D) $13,000 negative cash flow
A business renders services to a customer for $26,000 on account. Which of the
following accounts is debited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
________ is pay stated as a percentage of a sale amount.
A) Salary
B) Wage
C) Commission
D) Bonus
Shipman, Inc. has 7 units in inventory on December 31. The units were purchased in
November for $190 each. The price lists from suppliers indicate the current replacement
cost of the item to be $186 each. What is the effect on gross profit if Shipman values its
ending merchandise inventory using the lower-of-cost-or-market rule?
A) The gross profit would increase by $4.
B) The gross profit would not be affected.
C) The gross profit would decrease by $28.
D) The gross profit would increase by $28.
On December 1, 2016, Fine Dining Products borrowed $84,000 on a 12%, 5-year note
with annual installment payments of $16,800 plus interest due on December 1 of each
succeeding year. On December 1, the principal amount was recorded as a long-term
note payable. What amount of the note payable will be shown as current portion of
Long-Term Note Payable on the balance sheet as of December 31, 2016? (Round your
answer to nearest whole number.)
A) $16,800
B) $26,880
C) $10,080
D) $33,600