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Accounting Final P1

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1. A $55 credit to Sales was posted as a $160 credit. By what amount is Sales in error?
$55 understated.
$160 overstated.
$105 overstated.
$105 understated.
$160 understated.
2. A company purchased a new truck at a cost of $38,500 on July 1. The truck is estimated to have a useful life of 5 years and a salvage value of $4,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the truck during the first year ended December 31?

$3,450.
$3,850.
$4,200.
$6,900.
$7,700.

3. A company's gross profit was $81,950 and its net sales were $356,800. Its gross margin ratio equals
(Round your answer to 2 decimal places):

77.03%.
54.06%.
6.85%.
22.97%.
4.35%.


4. On April 1, a company paid the $1,998 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31? (Round your answer to 1 decimal places.)
a. $1,998.00.
b. $666.00.
c. $1,498.50.
d. $499.50. 
e. $55.50.

5. On September 30, the Cash account of Value Company had a normal balance of $6,700. During September, the account was debited for a total of $13,900 and credited for a total of $13,200. What was the balance in the Cash account at the beginning of September?
A $6,000 credit balance.
A $7,400 credit balance.
A $6,000 debit balance.  
A $0 balance.
A $7,400 debit balance.

6. At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $53,400 for accounts receivable. During January, the company collected $16,200 from customers on account and provided additional services to customers on account totaling $13,200. Additionally, during January one customer paid Thomas $5,700 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should b
$50,400. 
$3,000.
$56,100.
$50,700.
$56,400.

7. A company had no office supplies available at the beginning of the year. During the year, the company purchased $430 worth of office supplies. On December 31, $165 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$165.
$215.
$265.
$430.
$595.

8. Andrea Conaway opened Wonderland Photography on January 1 of the current year. During January, the following transact recorded in the company's books:

1. Conaway invested $22,000 cash in the business.

2. Conaway contributed $28,500 of photography equipment to the business.

3. The company paid $3,800 cash for an insurance policy covering the next 24 months.

4. The company received $9,100 cash for services provided during January.

5. The company purchased $7,900 of office equipment on credit.

6. The company provided $3,600 of services to customers on account.

7. The company paid cash of $2,350 for monthly rent.

8. The company paid $3,950 on the office equipment purchased in transaction #5 above.

9. Paid $360 cash for January utilities.

Based on this information, the balance in the cash account at the end of January would be:

$61,000.
$20,640. 
$28,900.
$24,600.
$22,000.

9. Hal Smith opened Smith's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books:

1. Smith invested $32,000 cash in the business.

2. Smith contributed $114,000 of equipment to the business.

3. The company paid $3,400 cash to rent office space for the month.

4. The company received $23,000 cash for repair services provided during March.

5. The company paid $7,600 for salaries for the month.

6. The company provided $4,400 of services to customers on account.

7. The company paid cash of $640 for monthly utilities.

8. The company received $4,500 cash in advance of providing repair services to a customer.

10. Smith withdrew $6,400 for his personal use from the company.

Based on this information, net income for March would be:

$15,760. 
$20,260.
$9,360.
$13,860.
$20,360.

11. Hal Smith opened Smith's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books:

1. Smith invested $32,500 cash in the business.

2. Smith contributed $115,000 of equipment to the business.
3. The company paid $3,500 cash to rent office space for the month.
4. The company received $23,500 cash for repair services provided during March.
5. The company paid $7,700 for salaries for the month.
6. The company provided $4,500 of services to customers on account.
7. The company paid cash of $650 for monthly utilities.
8. The company received $4,600 cash in advance of providing repair services to a customer.
9. Smith withdrew $6,500 for his personal use from the company.

Based on this information, the balance in Hal Smith, Capital reported on the Statement of Owner's Equity at the end of
March would be:
$161,750.
$157,150. 
$150,650.
$14,250.
$20,850.

12. On January 1 a company purchased a five-year insurance policy for $2,200 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
Debit Prepaid Insurance, $2,200; credit Cash, $2,200.

Debit Prepaid Insurance, $1,760; credit Insurance Expense, $1,760.
Debit Prepaid Insurance, $440; credit Insurance Expense, $440.
Debit Insurance Expense, $440; credit Prepaid Insurance, $440.   (2200/5yrs)
Debit Insurance Expense, $1,760; credit Prepaid Insurance, $1,760.

13. Gotham Company reported a December 31 ending inventory balance of $416,000. The following additional information is also available:

*The ending inventory balance of $416,000 included $72,800 of consigned inventory for which Gotham was the consignor.
*The ending inventory balance of $416,000 included $23,600 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year.
*The ending inventory balance of $416,000 did not include goods costing $48,800 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year.
*The ending inventory balance of $416,000 included damaged goods at their original cost of $39,600.
*The net realizable value of the damaged goo as $10,800.
*The ending inventory balance of $416,000 included $43,800 of consigned inventory for which Gotham was the consignee.

Based on this information, the correct balance for ending inventory on December 31 is:

$319,800 
$247,000
$363,600
$343,400
$309,000

12. On December 31 of the current year, Hewett Company reported an ending inventory balance of $216,500. The following additional information

Hewett sold goods costing $38,300 to Trump Enterprises on December 28 and shipped the goods on that date with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $216,500 because they were not in Hewett's warehouse.

Hewett purchased goods costing $44,300 on December 29. The goods were shipped FOB destination and were received by Hewett on January 2 following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $216,500.

Hewett's ending inventory balance of $216,500 included $15,300 of goods being held on consignment from Rumsfeld Company. (Hewett Company consignee.)

Hewett's ending inventory balance of $216,500 did not include goods costing $95,300 that were shipped to Hewett on December 27 with shipping terms of FOB destination and were still in transit at year-end.

Based on the above information, the correct balance for ending inventory on December 31 is:

$195,200
$156,900 
$172,200
$201,200
$210,500

14. A company had sales of $699,500 and cost of goods sold of $270,800. Its gross margin equals:

$(428,700).
$699,500.
$970,300.
$270,800.
$428,700.

14. A company had sales of $380,000 and its gross profit was $149,500. Its cost of goods sold equals:
$(230,500).
$529,500.
$149,500.
$230,500. 
$380,000.

15. A company's gross profit was $81,950 and its net sales were $356,800. Its gross margin ratio equals
(Round your answer to 2 decimal places):

77.03%.
54.06%.
6.85%.
22.97%.
4.35%.

16. Use the following information for Razor Company to compute inventory turnover for 2011.

2011 2010
Net sales $655,500 $584,500
Cost of goods sold 390,100 361,000
Ending inventory 79,300 80,980

(Round your final answer to two decimal places.)
8.27
4.92
7.22
4.46
4.87 





17. On October 1, Robinson Company sold merchandise in the amount of $6,400 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,600. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:

Accounts receivable      6,400 (debit)

Cost of goods sold                  4,600 (debit)


18. Based on the following information from Raptor Company's balance sheet, calculate the current ratio.
Current assets                          $77,000
Long-term investments            60,000
Plant assets                              260,000
Current liabilities                     49,000
Long-term liabilities                100,000
Raptor, Capital                         248,000

.64.
2.80.
2.62.
.92.
1.57. 

19. On October 1, Whaley Company sold merchandise in the amount of $6,600 to Lee Company, with credit terms of 1/10, n/30. The cost of the items sold is $4,800. Whaley uses the perpetual inventory system. Lee pays the invoice on October 8, and takes the appropriate discount. The journal entry that Whaley makes on October 8 is:

20. A company that has operated with a 30% average gross profit ratio for a number of years had $105,000 in sales during the first quarter of this year. If it began the quarter with $18,500 of inventory at cost and purchased $72,500 of inventory during the quarter, its estimated ending inventory by the gross profit method is:

$18,500.
$17,500.
$31,500.
$22,050.
$28,500.

 21. Hankco accepts all major bank credit cards, including Omni Bank's, which assesses a 3% charge on sales for using its card. On June 28, Hankco had $3,200 in Omni Card credit sales. What entry should Hankco make on June 28 to record the deposit?

22. Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $12,800, 90-day, 9% note. What entry should TechCom make on January 15 of the next year when the note is paid? (Use 360 days a
year. Do not round intermediate calculations.)

23. The interest accrued on $4,200 at 5% for 60 days is (Use 360 days a year. Do not round intermediate calculations):

$245.
$35.
$25.
$105.
$21.

24. Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $8,400, 90-day, 8% note. What entry should TechCom make on December 31, to record the accrued interest on the note? (Use 360 days a year. Do not round intermediate calculations.)

25. The following information is available for Johnson Manufacturing Company at June 30:
Cash in bank account                                                              $ 6,755
Inventory of postage stamps                                                    77
Money market fund balance                                                    12,700
Petty cash balance                                                                   380
NSF checks from customers returned by bank                       897
Postdated checks received from customers                              466
Money orders                                                                          557
A nine-month certificate of deposit maturing on
December 31 of current year                                                   8,300

Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
$20,392 
$20,809
$20,732
$19,835
$15,992

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