Q2
Question 1
Given below are account balances for Charlie Company:
Gross sales, $108,000
Sales returns and allowances, $5,000
Selling expenses, $12,000
Cost of goods sold, $54,000
Interest expense, $3,000
How much is the gross profit margin? (enter your percentage as a decimal rounded to two decimal places. Example – enter 46% as .46)
Your Answer:
Question 1 options:
Answer
Question 2
Merchandise is sold on account on January 16, terms 2/10, n/30, and recorded by debiting Accounts Receivable and crediting Sales for $2,000. If payment occurs on January 21, the journal entry would include a credit to:
Question 2 options:
Accounts Receivable for $1,960
Cash for $1,960
Sales Discounts for $40
Accounts Receivable for $2,000
Question 3
Merchandise was returned to a supplier. The goods were previously purchased on account. The goods had not been paid for and there were no discounts. Assuming a periodic system, what journal entry is needed by the purchaser to record the return?
Question 3 options:
Debit Accounts Payable, and Credit Inventory.
Debit Accounts Payable, and Credit Purchase Discounts.
Debit Accounts Payable, and Credit Purchase Returns and Allowances.
Debit Accounts Payable, and Credit Purchases.
Question 4 (9 points)
Alpha Company provided the following data concerning its income statement: sales, $1,045,000; purchases, $500,000; beginning inventory, $265,000; ending inventory, $267,000; operating expenses, $114,000; freight-in, $5,000; sales discounts, $19,000; purchases discounts, $15,000; sales returns & allowances, $98,000; and purchases returns & allowances, $38,000. The data are complete and provide the basis for preparation of an income statement. How much is net income?
Your Answer:
Question 4 options:
Answer
Question 5
Alpha Company used the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used.
Alpha Company sold on account $2,500 of merchandise to Bravo Company on May 2, 2016. Selling price was $4,000. Freight charges related to this transaction of $150 were paid by Alpha Company.
Bravo Company returned, to Alpha Company, $250 of this merchandise on May 3, 2016. Merchandise was sold for $400
Use this information to prepare Alpha Company’s General Journal entries (without explanation) for May 2 & May 3 entries. If no entry is required then write “No Entry Required.”
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Question 6
Alpha Company replenished a $500 petty cash fund. The petty cash box contained vouchers of $87 for postage, $173 for supplies, $58 for gasoline, and cash on hand of $180. The journal entry to reflect replenishment would include a:
Question 6 options:
credit to Petty Cash for $2
credit to Cash or $180
credit to Cash for $318
debit to Cash Short for $2
Question 7 (9 points)
Annapolis Company’s bank statement indicated an ending cash balance of $9,940. Alpha’s accountant discovered that outstanding checks amounted to $515 and deposits in transit were $520. Additionally, the bank statement showed service charges of $35. What is the correct adjusted ending cash balance
Your Answer:
Question 7 options:
Answer
Question 8
Baltimore Company uses aging to estimate uncollectibles. At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance that consists of:
Dollar Value Age of Account Estimated Collectible
$170,000 < 30 days old 98%
60,000 30 to 60 days old 92%
40,000 61 to 120 days old 71%
11,000 > 120 days old 10%
The current unadjusted Allowance for Uncollectible Accounts balance is a debit balance of $2,000 and the Bad Debt Expense accounts has an unadjusted balance of zero. After the adjusting entry is made, what will be the dollar balances in the Allowance for Doubtful Accounts? Round to nearest whole dollar.
Your Answer:
Question 8 options:
Answer
Question 9 (9 points)
Dorchester Company had the following balances at the end of 2018 and 2019 respectively:
Net Credit Sales – $860,000 for 2018 and $962,000 for 2019.
Accounts Receivable – $100,000 for 2018 and $115,000 for 2019.
Allowance for Doubtful Accounts – $5,000 for 2018 and 6,500 for 2019
Calculate the accounts receivable turnover ratio to one decimal place.
Your Answer:
Question 9 options:
Answer
Question 10 (9 points)
Easton Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2019:
Date Activity Quantity Unit Price
5/1 Beginning Inventory 100 $10
5/5 Purchase 220 $12
5/15 Purchase 340 $14
5/25 Purchase 300 $16
Sales were 470 units at $20. Using the FIFO method, determine the dollar value of Cost of Goods Sold for the month of May.
Your Answer:
Question 10 options:
Answer
Question 11
Easton Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2019:
Date Activity Quantity Unit Price
5/1 Beginning Inventory 125 $10
5/5 Purchase 200 $12
5/15 Purchase 210 $14
5/25 Purchase 250 $16
Sales were 530 units at $20. Using the LIFO method, determine the dollar value of Cost of Goods Sold for the month of May.
Your Answer:
Question 11 options:
Answer
Question 12
Easton Company had average inventory for the year of $640,000 and an inventory turnover ratio of 8.6. What was the company’s Days Outstanding in Inventory. Assume a 365 day year. Round to one decimal place.
Your Answer:
Question 12 options:
Sample Solution
