Total asset turnover is computed as net sales /average total assets.
Bina Co. purchased a vehicle on January 1st, for $15,000 and estimates it will use the vehicle for
eight years with a $3,000 salvage value. Using the double declining-balance depreciation method,
compute the vehicle's second year depreciation expense.
$3,000.00
$2,812.50
$2,250.00
$3,750.00
Amortization expense is recorded on which financial statement?
Income statement
Balance sheet
Statement of retained earnings
__ is measured as the excess of the cost of an acquired entity over the value of the acquired net
assets.
Patent
Goodwill
Leasehold
Copyright
A company acquires a patent for $20,000 to manufacture and sell an item. The company intends to hold
the patent for 5 years. Amortization for the first year will be recorded with a debit to Amortization Expense
for $4000.
Wednesday, November 27, 2019
Keva Co. trades in a vehicle with an original cost of $20,000 and accumulated depreciation of $18,000
Keva Co. trades in a vehicle with an original cost of $20,000 and accumulated depreciation of
$18,000. The list price of the new vehicle is $25,000. In addition to the old vehicle, Keva also
provides $24,000 cash. The ent/y to record this transaction would include debits to which of the
following accounts? (Check all that apply.)
Vehicles for $25,000
Accumulated Depreciation-Vehicles for $18,000
Loss on Exchange of Vehicles for $1,000
Book value fs $20,000-$1.8,000=$1!,000. Asset received = $25,000
- assets gjven $2,000 book-value+ $24,000 = $2.6,000. Loss= $25 000 26 000 ~ $1,000.
Cash for $24,000
Gain on Exchange of Vehicles for $1,000
An oil company recognizes the cost of discovering and operating oil wells by recording __ _
expense for each unit of oil used.
operating
depletion
depreciation
amortization
Goodwill is the amount by which a company's value exceeds the value of its individual assets and
liabilities. It is recorded as an intangible asset, but is not amortized.
Which of the following items related to depreciating equipment would be found on a company's
income statement?
Depreciation Expense - Equipment
Accumulated Depreciation - Equipment
Equipment
Net Book Value
$18,000. The list price of the new vehicle is $25,000. In addition to the old vehicle, Keva also
provides $24,000 cash. The ent/y to record this transaction would include debits to which of the
following accounts? (Check all that apply.)
Vehicles for $25,000
Accumulated Depreciation-Vehicles for $18,000
Loss on Exchange of Vehicles for $1,000
Book value fs $20,000-$1.8,000=$1!,000. Asset received = $25,000
- assets gjven $2,000 book-value+ $24,000 = $2.6,000. Loss= $25 000 26 000 ~ $1,000.
Cash for $24,000
Gain on Exchange of Vehicles for $1,000
An oil company recognizes the cost of discovering and operating oil wells by recording __ _
expense for each unit of oil used.
operating
depletion
depreciation
amortization
Goodwill is the amount by which a company's value exceeds the value of its individual assets and
liabilities. It is recorded as an intangible asset, but is not amortized.
Which of the following items related to depreciating equipment would be found on a company's
income statement?
Depreciation Expense - Equipment
Accumulated Depreciation - Equipment
Equipment
Net Book Value
Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional four years.
To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be
calculated by taking (cost total units of capacity.
+ operating expenses
operating expenses
salvage value
+salvage value
Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional
four years. The entry to record this purchase would include a debit to the ___ account.
Repairs & Maintenance Expense
Equipment
Depreciation Expense - Equipment
Cash
If an intangible asset has a limited life, its cost is systematically allocated to expense over its useful
life through the process of:
amortization
depreciation
depletion
impairment
_____ are expenditures that extend the assets useful life beyond its original estimate.
calculated by taking (cost total units of capacity.
+ operating expenses
operating expenses
salvage value
+salvage value
Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional
four years. The entry to record this purchase would include a debit to the ___ account.
Repairs & Maintenance Expense
Equipment
Depreciation Expense - Equipment
Cash
If an intangible asset has a limited life, its cost is systematically allocated to expense over its useful
life through the process of:
amortization
depreciation
depletion
impairment
_____ are expenditures that extend the assets useful life beyond its original estimate.
Revenue expenditures
Extraordinary repairs
Betterments
Ordinary repairs
___ are expenditures that keep an asset in normal, good operating condition. They are necessary
if an asset is to perform to expectations over its useful life.
Ordinary Repairs
Grand Co. trades in an old machine for a new machine. The new machine has a list price of $10,000. The old machine has a cost of $12,000
A patent was purchased for $20,000 and expected to be used for the 20-year life with no salvage
value. The entry to expense the patent during the· second year of life will include which of the
following entries? (Check all that apply.)
Credit to Accumulated Amortization $1,000.
Debit to Amortization Expense $1,000.
Debit to Accumulated Amortization $1,000.
Credit to Amortization Expense $1,000.
Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste
produced by the machine (and therefore, Increasing efficiency). The journal entry to record this
upgrade would Include which of the following entries? (Check all that apply.)
Debit to Machinery
Debit to Repair & Maintenance Expense
Credit to Repair & Maintenance Expense
Credit to Machinery
Credit to Cash
Debit to Cash
Grand Co. trades in an old machine for a new machine. The new machine has a list price of $10,000. The
old machine has a cost of $12,000 and accumulated depreciation of $9,000. In addition, Grand will pay
$6,000 towards the purchase. Because the new machine is much more technologically advanced, the
exchange has commercial substance. The trade will include a (gain/loss) gain of $1000.
value. The entry to expense the patent during the· second year of life will include which of the
following entries? (Check all that apply.)
Credit to Accumulated Amortization $1,000.
Debit to Amortization Expense $1,000.
Debit to Accumulated Amortization $1,000.
Credit to Amortization Expense $1,000.
Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste
produced by the machine (and therefore, Increasing efficiency). The journal entry to record this
upgrade would Include which of the following entries? (Check all that apply.)
Debit to Machinery
Debit to Repair & Maintenance Expense
Credit to Repair & Maintenance Expense
Credit to Machinery
Credit to Cash
Debit to Cash
Grand Co. trades in an old machine for a new machine. The new machine has a list price of $10,000. The
old machine has a cost of $12,000 and accumulated depreciation of $9,000. In addition, Grand will pay
$6,000 towards the purchase. Because the new machine is much more technologically advanced, the
exchange has commercial substance. The trade will include a (gain/loss) gain of $1000.
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage value.
Trio Co. reported that maintenance and repair costs are expensed as incurred. If Trio's current year
machinery and equipment repair costs are $8,200, which accounts would be Impacted to complete
the journal entry? (Check all that apply.)
Credit Repairs expense.
Debit Repairs expense.
Credit Machinery & equipment
Debit Machinery & equipment
Credit Cash.
Debit Cash.
The process of allocating the cost of a natural resource to a period when it is consumed requires a debit
entry to the Depletion Expense account.
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for
$300,000 and has $50,000 salvage value. During the current period, Seven mined and sold
200,000 tons of coal. Depletion expense for the period will be how much?
machinery and equipment repair costs are $8,200, which accounts would be Impacted to complete
the journal entry? (Check all that apply.)
Credit Repairs expense.
Debit Repairs expense.
Credit Machinery & equipment
Debit Machinery & equipment
Credit Cash.
Debit Cash.
The process of allocating the cost of a natural resource to a period when it is consumed requires a debit
entry to the Depletion Expense account.
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for
$300,000 and has $50,000 salvage value. During the current period, Seven mined and sold
200,000 tons of coal. Depletion expense for the period will be how much?
$30,000
$60,000
$50,000
____ are expenditures that make a plant asset more efficient or productive, but do not always
increase an asset's useful life.
Revenue expenditures
Ordinary repairs
Extraordinary repairs
Betterments
Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees,
and $500 in title costs. Ion should record the cost of this land to be:
$196,500
$190,000
$195,500
$196,000
$195,000
At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was purchased two years ago for $12,000
Which of the following assets are amortized? (Check all that apply.)
Coal mine
Patent
Land
Building
Copyright
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including
brokerage, title, and attorney fees). Geo also paid $60,000 to modify the building, changing the layout
specifically for Geo's needs. Geo should record the building at $495000.
$400,00035,00060,000=$495,000
Land improvements are assets that Increase the benefits of land, have a limited useful life, and are
depreciated-such as sidewalks and fences.
Book value can be calculated by taking an asset's acquisition costs less its accumulated depreciation.
At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was
purchased two years ago for $12,000. At the beginning of the year, the balance in accumulated
depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year with a zero salvage
value. How much is accumulated depreciation at the end of the year?
$10,000
$2,000
$4,000
$6,000
$12,000
$8,000
Coal mine
Patent
Land
Building
Copyright
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including
brokerage, title, and attorney fees). Geo also paid $60,000 to modify the building, changing the layout
specifically for Geo's needs. Geo should record the building at $495000.
$400,00035,00060,000=$495,000
Land improvements are assets that Increase the benefits of land, have a limited useful life, and are
depreciated-such as sidewalks and fences.
Book value can be calculated by taking an asset's acquisition costs less its accumulated depreciation.
At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was
purchased two years ago for $12,000. At the beginning of the year, the balance in accumulated
depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year with a zero salvage
value. How much is accumulated depreciation at the end of the year?
$10,000
$2,000
$4,000
$6,000
$12,000
$8,000
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years wlth a $2,000 salvage value
(Capital/Revenue)Capital expenditures are additional costs of plant assets that provide benefits
extending beyond the current period, such as a plant expansion, or machine overhaul.
Consistent with the principle, plant assets should be recorded at cost, which includes all
the normal and reasonable expenditures necessary to get the asset in place and ready for its
intended use.
monetary unit
plant asset
cost
full disclosure
___ are nonphysical assets (used in operations) that confer on their owners long-term rights,
privileges, or competitive advantages.
Natural resource
Intangible assets
Plant assets
Current assets
Accumulated depreciation is a contra asset account (one that is linked with the plant asset account, but
has an opposite normal balance) and is reported on the balance sheet.
(Plant;Current)Plant assets purchased as a group in a single transaction for a lump-sum price (also called
a lump-sum, group, bulk, or basket purchase) are allocated the purchase price based on their relative
market values.
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for
four-years wlth a $2,000 salvage value. Using the straight-line depreciation method, compute the
machine's first year partial depreciation expense for October 30 through December 31.
$6,000
$1,000
$1,500
$3,000
extending beyond the current period, such as a plant expansion, or machine overhaul.
Consistent with the principle, plant assets should be recorded at cost, which includes all
the normal and reasonable expenditures necessary to get the asset in place and ready for its
intended use.
monetary unit
plant asset
cost
full disclosure
___ are nonphysical assets (used in operations) that confer on their owners long-term rights,
privileges, or competitive advantages.
Natural resource
Intangible assets
Plant assets
Current assets
Accumulated depreciation is a contra asset account (one that is linked with the plant asset account, but
has an opposite normal balance) and is reported on the balance sheet.
(Plant;Current)Plant assets purchased as a group in a single transaction for a lump-sum price (also called
a lump-sum, group, bulk, or basket purchase) are allocated the purchase price based on their relative
market values.
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for
four-years wlth a $2,000 salvage value. Using the straight-line depreciation method, compute the
machine's first year partial depreciation expense for October 30 through December 31.
$6,000
$1,000
$1,500
$3,000
On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500.
Ironworks Co. sells a machine that cost $5,000 with a current book value of $1,500 for $2,000 cash.
Ironworks will record a debit to which account and for how much?
Accumulated Depreciation - Equipment for $:ll,500
Equipment for $5,000
Equipment for $3,500
Accumulated Depreciation - Equipment for $3,500
Prive Co. purchases a machine that cost $15,000. Prive estimates a 5-year life with no salvage value.
The first three years of depreciation expense are $6,000; $3,600; and $2,160, respectively. Based
on this information, Prive is using the ___ depreciation method.
straight-line
declining-balance
units-of-production
On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated
depreciation of $4,500. The entry to record this disposal would include a debit to which account and
for how much?
Depreciation Expense - Equipment for $1,500
Loss on Disposal of Equipment for $1,500
Accumulated Depreciation for $6,000
Equipment for $6,000
The method of depreciation that charges a varying amount to depreciation expense for each period of
an asset's useful life depending on Its usage is called the method.
straight-line
MACRS
units-of-production
declining-balance
Ironworks will record a debit to which account and for how much?
Accumulated Depreciation - Equipment for $:ll,500
Equipment for $5,000
Equipment for $3,500
Accumulated Depreciation - Equipment for $3,500
Prive Co. purchases a machine that cost $15,000. Prive estimates a 5-year life with no salvage value.
The first three years of depreciation expense are $6,000; $3,600; and $2,160, respectively. Based
on this information, Prive is using the ___ depreciation method.
straight-line
declining-balance
units-of-production
On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated
depreciation of $4,500. The entry to record this disposal would include a debit to which account and
for how much?
Depreciation Expense - Equipment for $1,500
Loss on Disposal of Equipment for $1,500
Accumulated Depreciation for $6,000
Equipment for $6,000
The method of depreciation that charges a varying amount to depreciation expense for each period of
an asset's useful life depending on Its usage is called the method.
straight-line
MACRS
units-of-production
declining-balance
A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation.
A company owns an asset that Is fully depreciated. The asset is no longer being used in operations
and has no market value. The company has decided to ___ the asset by recording an entry to
remove it from the balance sheet.
discard
depreciate
take a loss on
Straight-line depreciation is calculated by taking cost - (salvage/market)salvage value.
Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods
benefiting from its use.
Brice Co. purchases land in order to drill oil. This land would be classified as a{n) ___ on the
balance sheet.
and has no market value. The company has decided to ___ the asset by recording an entry to
remove it from the balance sheet.
discard
depreciate
take a loss on
Straight-line depreciation is calculated by taking cost - (salvage/market)salvage value.
Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods
benefiting from its use.
Brice Co. purchases land in order to drill oil. This land would be classified as a{n) ___ on the
balance sheet.
plant asset
intangible asset
current asset
natural resource
A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated
depreciation. The entry to record this transaction will Include which of the following entries? (Check
all that apply.)
On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last five years and have a salvage value of $1,500
The factors necessary to compute depreciation include (cost selling price/market value)cost, salvage
value and useful life.
___ value, also called residual value or scrap value, is an estimate of the asset's value at the end
of its benefit period.
Leftover
Useful
Obsolescence
Salvage
On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last
five years and have a salvage value of $1,500. Compute depreciation expense for the first year,
assuming the company uses the straight-line method.
$2,300
$2,000
$2,600
value and useful life.
___ value, also called residual value or scrap value, is an estimate of the asset's value at the end
of its benefit period.
Leftover
Useful
Obsolescence
Salvage
On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last
five years and have a salvage value of $1,500. Compute depreciation expense for the first year,
assuming the company uses the straight-line method.
$2,300
$2,000
$2,600
The useful life (also called service life) is the length of time the asset is productively used in a company's
operations.
Plant assets are assets used in a company's operations that have a useful life of more than one
accounting period.
A delivery van that cost $45,000 with accumulated depreciation of $15,000 Is sold for $20,000. How
much gain or loss will be recognized on this sale?
$10,000 gain
$20,000 loss
$15,000 gain
$5,000 loss
$20,000 gain
$10,000 loss
Assume the company estimates that 5% of its accounts receivable will never be collected. a. Prepare the proper journal entry to recognize the expense
Assume the company estimates that 5% of its accounts receivable
will never be collected.
a. Prepare the proper journal entry to recognize the expense
involved.
Bad Debts Expense 2,000
Allowance for Doubtful Accounts 2,000
b. Present the balances in Accounts Receivable and Allowance for
Doubtful Accounts as they would appear on the balance sheet.
Also show the net realizable Accounts Receivable.
Accounts Receivable .................................................$800,000
Less: Allowance for Doubtful Accounts ........ 40,000
Estimated Realizable Accounts Receivable .$760,000
will never be collected.
a. Prepare the proper journal entry to recognize the expense
involved.
Bad Debts Expense 2,000
Allowance for Doubtful Accounts 2,000
b. Present the balances in Accounts Receivable and Allowance for
Doubtful Accounts as they would appear on the balance sheet.
Also show the net realizable Accounts Receivable.
Accounts Receivable .................................................$800,000
Less: Allowance for Doubtful Accounts ........ 40,000
Estimated Realizable Accounts Receivable .$760,000
Under assumptions 1 and 2 above, give the proper journal entries for
the following events.
June 3 John Shifty, who owes us $500, informs us that
he is broke and cannot pay. We believe him.
Nov. 9 We learned that John Shifty has won the lottery and
is willing to pay off all his old debts
.
June 3 Allowance for Doubtful Accounts............. 500
Accounts Receivable, John Shifty....... 500
Nov. 9 Accounts Receivable, John Shifty............ 500
Allowance for Doubtful Accounts........ 500
At the end of the year, the M. I. Wright Company showed the following selected account balances:
At the end of the year, the M. I. Wright Company showed the following
selected account balances:
Sales (all on credit) ............................................................................$300,000
Accounts Receivable ......................................................................... 800,000
Allowance for Doubtful Accounts..................................................... 38,000
Required:
1. Assume the company estimates that 1% of all credit sales will not be
collected.
a. Prepare the proper journal entry to recognize the expense
involved.
Bad Debts Expense 3,000
Allowance for Doubtful Accounts 3,000
b. Present the balances in Accounts Receivable and Allowance for
Doubtful Accounts as they would appear on the balance sheet.
Also show the net realizable Accounts Receivable.
Accounts Receivable .................................................$800,000
Less: Allowance for Doubtful Accounts ........ 41,000
Estimated Realizable Account Receivable….$759,000
selected account balances:
Sales (all on credit) ............................................................................$300,000
Accounts Receivable ......................................................................... 800,000
Allowance for Doubtful Accounts..................................................... 38,000
Required:
1. Assume the company estimates that 1% of all credit sales will not be
collected.
a. Prepare the proper journal entry to recognize the expense
involved.
Bad Debts Expense 3,000
Allowance for Doubtful Accounts 3,000
b. Present the balances in Accounts Receivable and Allowance for
Doubtful Accounts as they would appear on the balance sheet.
Also show the net realizable Accounts Receivable.
Accounts Receivable .................................................$800,000
Less: Allowance for Doubtful Accounts ........ 41,000
Estimated Realizable Account Receivable….$759,000
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of
two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card and
credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair
deposits the Zisa credit card receipts each business day. When customers use Access credit cards,
Mayfair accumulates the receipts for several days before submitting them to Access for payment.
Access deducts a 2% service charge and usually pays within one week of being billed. Mayfair
completes the following transactions in June. (The terms of all credit sales are 2/1 5, n/30, and all sales
are recorded at the gross price.)
June 4 Sold $650 of merchandise (that had cost $400) on credit to Natara Morris.
5 Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards.
6 Sold $5,850 of mercl1andise (that had cost $3,800) to customers who used their Access cards.
8 Sold $4.350 of merchandise (that had cost $2,900) to customers who used their Access cards.
10 Submitted Access card receipts accumulated since June 6 to the credit card company for
payment.
13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $429
balance in McKee's account stemmed from a credit sale in October of last year.
17 Received the amount due from Access.
18 Received Morris's check in full payment for the purchase of June 4.
Required:
Prepare journal entries to record the preceding transactions and events. (The company uses the
perpetual inventory system.) (If no entry is required for a particular transaction, select "No journal
entry required" in the first account field.)
two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card and
credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair
deposits the Zisa credit card receipts each business day. When customers use Access credit cards,
Mayfair accumulates the receipts for several days before submitting them to Access for payment.
Access deducts a 2% service charge and usually pays within one week of being billed. Mayfair
completes the following transactions in June. (The terms of all credit sales are 2/1 5, n/30, and all sales
are recorded at the gross price.)
June 4 Sold $650 of merchandise (that had cost $400) on credit to Natara Morris.
5 Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards.
6 Sold $5,850 of mercl1andise (that had cost $3,800) to customers who used their Access cards.
8 Sold $4.350 of merchandise (that had cost $2,900) to customers who used their Access cards.
10 Submitted Access card receipts accumulated since June 6 to the credit card company for
payment.
13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $429
balance in McKee's account stemmed from a credit sale in October of last year.
17 Received the amount due from Access.
18 Received Morris's check in full payment for the purchase of June 4.
Required:
Prepare journal entries to record the preceding transactions and events. (The company uses the
perpetual inventory system.) (If no entry is required for a particular transaction, select "No journal
entry required" in the first account field.)
Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600
Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000,
allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to
be 1.5% of accounts receivable.
1. Prepare the December 31 year-end adjusting entr1 for uncollectibles
2. What amount would have been used in the· year-end adjusting entry if the allowance account had a
year-end unadjusted debit balance of $300?
The following data are taken from the comparative balance sheets of Ruggers Company.
2013
Accounts receivable, net $153,400
Net sales 861,105
2012
$138,500
910,600
Complete the below table to calculate the accounts receivable turnover for the year 2013.
allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to
be 1.5% of accounts receivable.
1. Prepare the December 31 year-end adjusting entr1 for uncollectibles
2. What amount would have been used in the· year-end adjusting entry if the allowance account had a
year-end unadjusted debit balance of $300?
The following data are taken from the comparative balance sheets of Ruggers Company.
2013
Accounts receivable, net $153,400
Net sales 861,105
2012
$138,500
910,600
Complete the below table to calculate the accounts receivable turnover for the year 2013.
Morales Company recorded the following selected transactions during November 2013.
Morales Company recorded the following selected transactions during November 2013.
Date General Journal Debit Credit
Nov. 5 Accounts Receivable- Ski Shop 4,670
Sales 4,670
10 Accounts Receivable- Welcome Enterprises 2,435
Sales 2,435
13 Accounts Receivable- Zia Natara 1,428
Sales 1,428
21 Sales Returns and Allowances 368
Accounts Receivable- Zia Natara 368
30 Accounts Receivable- Ski Shop 5,076
Sales 5,076
Prepare a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns
and Allowances. Also open an accounts receivable subsidiary ledger having a T-account for each
customer. Post these entries to both the general ledger and the accounts receivable ledger.
2. Prepare a schedule of accounts receivable.
Date General Journal Debit Credit
Nov. 5 Accounts Receivable- Ski Shop 4,670
Sales 4,670
10 Accounts Receivable- Welcome Enterprises 2,435
Sales 2,435
13 Accounts Receivable- Zia Natara 1,428
Sales 1,428
21 Sales Returns and Allowances 368
Accounts Receivable- Zia Natara 368
30 Accounts Receivable- Ski Shop 5,076
Sales 5,076
Prepare a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns
and Allowances. Also open an accounts receivable subsidiary ledger having a T-account for each
customer. Post these entries to both the general ledger and the accounts receivable ledger.
2. Prepare a schedule of accounts receivable.
Following are selected transactions for Ridge Company. Mar. 21 Accepted a $3,400, 180-0ay, 8% note dated March 21 from Tamara Jackson
Following are selected transactions for Ridge Company.
Mar. 21 Accepted a $3,400, 180-0ay, 8% note dated March 21 from Tamara Jackson in granting a time
extension on her past-due account receivable.
Sept 17 Jackson dishonors her note when it is presented for payment
Dec. 31 After exhausting all legal means of collection, Ridge Company writes off Jackson's account
against the Allowance for Doubtful Accounts.
First, complete the table below to calculate the interest amounts at September 17. (Use 360 days a
year.)
Use the calculated value to prepare your journal entries.
Mar. 21 Accepted a $3,400, 180-0ay, 8% note dated March 21 from Tamara Jackson in granting a time
extension on her past-due account receivable.
Sept 17 Jackson dishonors her note when it is presented for payment
Dec. 31 After exhausting all legal means of collection, Ridge Company writes off Jackson's account
against the Allowance for Doubtful Accounts.
First, complete the table below to calculate the interest amounts at September 17. (Use 360 days a
year.)
Use the calculated value to prepare your journal entries.
At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales of $604,000. Chan records its Bad Debts Expense
At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales
of $604,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan
decides that the $302 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park
unexpectedly pays the amount previously written off.
Prepare the journal entries of Chan to record these transactions and events of December 31, February
1, and June 5.
On August 2, 2013, Jun Co. receives a $6,000, 90-0ay, 12% note from customer Ryan Albany as
payment on his $6,000 account.
Prepare the journal entry assuming the note is honored by the customer on October 31, 2013. (Use
360 days a year.)
of $604,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan
decides that the $302 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park
unexpectedly pays the amount previously written off.
Prepare the journal entries of Chan to record these transactions and events of December 31, February
1, and June 5.
On August 2, 2013, Jun Co. receives a $6,000, 90-0ay, 12% note from customer Ryan Albany as
payment on his $6,000 account.
Prepare the journal entry assuming the note is honored by the customer on October 31, 2013. (Use
360 days a year.)
Liang Company began operations on January 1, 2012. During its first two years, the company completed a number of transactions involving sales on credit,
Liang Company began operations on January 1, 2012. During its first two years, the company
completed a number of transactions involving sales on credit, accounts receivable collections, and bad
debts. These transactions are summarized as follows:
2012
a. Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.
b. Wrote off$18,300 of uncollectible accounts receivable.
c. Received $669,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable
will be uncollectible.
2013
e. Sold $1,525,634 of merchandise (that had cost $1,250,000) on credit, terms n/30.
t. Wrote off $27,800 of uncollectible accounts receivable.
g. Received $1,204,600 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable
will be uncollectible.
Required:
Prepare journal entries to record Liang's 20 12 summarized transactions and its year-end adjustments
to record bad debts expense. (The company uses the perpetual inventor/ system and it applies the
allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest
dollar amount.)
Prepare journal entries to record Liang's 20 13 summarized transactions and its year-end adjustments
to record bad debts expense. (The company uses the perpetual inventory system and it applies the
allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest
dollar amount.)
completed a number of transactions involving sales on credit, accounts receivable collections, and bad
debts. These transactions are summarized as follows:
2012
a. Sold $1,345,434 of merchandise (that had cost $975,000) on credit, terms n/30.
b. Wrote off$18,300 of uncollectible accounts receivable.
c. Received $669,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable
will be uncollectible.
2013
e. Sold $1,525,634 of merchandise (that had cost $1,250,000) on credit, terms n/30.
t. Wrote off $27,800 of uncollectible accounts receivable.
g. Received $1,204,600 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.5% of accounts receivable
will be uncollectible.
Required:
Prepare journal entries to record Liang's 20 12 summarized transactions and its year-end adjustments
to record bad debts expense. (The company uses the perpetual inventor/ system and it applies the
allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest
dollar amount.)
Prepare journal entries to record Liang's 20 13 summarized transactions and its year-end adjustments
to record bad debts expense. (The company uses the perpetual inventory system and it applies the
allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest
dollar amount.)
Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off a $800 account of a customer, C. Green
Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off a
$800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green.
1. Prepare the journal entry for January 31.
2. Prepare the entries for March 9; assume no additional money is expected from Green.
Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000,
allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to
be 0.5% of sales.
Prepare tl1e December 31 year-end adjusting entry for uncollectibles.
$800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green.
1. Prepare the journal entry for January 31.
2. Prepare the entries for March 9; assume no additional money is expected from Green.
Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000,
allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to
be 0.5% of sales.
Prepare tl1e December 31 year-end adjusting entry for uncollectibles.
Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system). 1. Sold $20,000 of merchandise, that cost $15,000, on MasterCard credit cards.
Prepare journal entries for the following credit card sales transactions (the company uses the perpetual
inventory system).
1. Sold $20,000 of merchandise, that cost $15,000, on MasterCard credit cards. The net cash receipts
from sales are immediately deposited in the seller's bank account. MasterCard charges a 5% fee.
2. Sold $5,000 of merchandise, that cost $3,000, on an assortment of credit cards. Net cash receipts
are received 5 days later, and a 4% fee is charged.
inventory system).
1. Sold $20,000 of merchandise, that cost $15,000, on MasterCard credit cards. The net cash receipts
from sales are immediately deposited in the seller's bank account. MasterCard charges a 5% fee.
2. Sold $5,000 of merchandise, that cost $3,000, on an assortment of credit cards. Net cash receipts
are received 5 days later, and a 4% fee is charged.
The following selected transactions are from Ohlmeyer Company. 2012 Dec. 16 Accepted a $10,800, 60-day, 8% note dated this day in granting Danny Todd
The following selected transactions are from Ohlmeyer Company.
2012
Dec. 16 Accepted a $10,800, 60-day, 8% note dated this day in granting Danny Todd a time extension
on his past-due account receivable.
31 Made an adjusting entry to record the accrued interest on the Todd note.
2013
Feb. 14 Received Todd's payment of principal and interest on the note dated December 16.
Mar. 2 Accepted an $6, 100, 8%, 90-day note dated this day in granting a time extension on the past·
due account receivable from Midnight Co.
17 Accepted a $2,400, 30-day, 7% note dated this day in granting Ava Privet a time extension on
her past-due account receivable.
Apr. 16 Privet dishonored her note when presented for payment.
June 2 Midnight Co. refuses to pay the note that was due to Ohlmeyer Co. on May 31. Prepare the
journal entry to c11arge the dishonored note plus accrued interest to Midnight Co.'s accounts
receivable.
July 17 Received payment from Midnight Co. for the maturity value of its dishonored note plus interest
for 46 days beyond maturity at 8%.
Aug. 7 Accepted an $7,450, 90-day, 10% note dated this day in granting a time extension on the
past-due account receivable of Mulan Co.
Sept. 3 Accepted a $2, 100, 60-day, 10% note dated this day in granting Noah Carson a time
extension on his past-due account receivable.
Nov. 2 Received payment of principal plus interest from Carson for the September 3 note.
Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note.
Dec. 1 Wrote off the Privet account against Allowance for Doubtful Accounts.
(Do not round intermediate calculations . Use 360 days a year.)
Required:
First, complete the table below to calculate the interest amount at December 31.
2012
Dec. 16 Accepted a $10,800, 60-day, 8% note dated this day in granting Danny Todd a time extension
on his past-due account receivable.
31 Made an adjusting entry to record the accrued interest on the Todd note.
2013
Feb. 14 Received Todd's payment of principal and interest on the note dated December 16.
Mar. 2 Accepted an $6, 100, 8%, 90-day note dated this day in granting a time extension on the past·
due account receivable from Midnight Co.
17 Accepted a $2,400, 30-day, 7% note dated this day in granting Ava Privet a time extension on
her past-due account receivable.
Apr. 16 Privet dishonored her note when presented for payment.
June 2 Midnight Co. refuses to pay the note that was due to Ohlmeyer Co. on May 31. Prepare the
journal entry to c11arge the dishonored note plus accrued interest to Midnight Co.'s accounts
receivable.
July 17 Received payment from Midnight Co. for the maturity value of its dishonored note plus interest
for 46 days beyond maturity at 8%.
Aug. 7 Accepted an $7,450, 90-day, 10% note dated this day in granting a time extension on the
past-due account receivable of Mulan Co.
Sept. 3 Accepted a $2, 100, 60-day, 10% note dated this day in granting Noah Carson a time
extension on his past-due account receivable.
Nov. 2 Received payment of principal plus interest from Carson for the September 3 note.
Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note.
Dec. 1 Wrote off the Privet account against Allowance for Doubtful Accounts.
(Do not round intermediate calculations . Use 360 days a year.)
Required:
First, complete the table below to calculate the interest amount at December 31.
Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card,
Levine Company uses the perpetual inventory system and allows customers to use two credit cards in
charging purchases. With the Suntrust Bank Card, Levine receives an immediate credit to its account
when it deposits sales receipts. Suntrust assesses a 4% service charge for credit card sales. The
second credit card that Levine accepts is the Continental Card. Levine sends its accumulated receipts
to Continental on a weekly basis and is paid by Continental about a week later. Continental assesses a
2.5% charge on sales for using its card.
Apr. 8 Sold merchandise for $7,800 (that had cost $5,764) and accepted the customer's Suntrust Bank
Card. The Suntrust receipts are immediately deposited in Levine's bank account.
12 Sold merchandise for $9,1 00 (that had cost $5,897) and accepted the customer's Continental
Card. Transferred $9,1 00 of credit card receipts to Continental, requesting payment.
20 Received Continental's check for the April 12 billing, less the service charge.
Prepare journal entries to record the above selected credit card transactions of Levine Company.
charging purchases. With the Suntrust Bank Card, Levine receives an immediate credit to its account
when it deposits sales receipts. Suntrust assesses a 4% service charge for credit card sales. The
second credit card that Levine accepts is the Continental Card. Levine sends its accumulated receipts
to Continental on a weekly basis and is paid by Continental about a week later. Continental assesses a
2.5% charge on sales for using its card.
Apr. 8 Sold merchandise for $7,800 (that had cost $5,764) and accepted the customer's Suntrust Bank
Card. The Suntrust receipts are immediately deposited in Levine's bank account.
12 Sold merchandise for $9,1 00 (that had cost $5,897) and accepted the customer's Continental
Card. Transferred $9,1 00 of credit card receipts to Continental, requesting payment.
20 Received Continental's check for the April 12 billing, less the service charge.
Prepare journal entries to record the above selected credit card transactions of Levine Company.
Conroy Company uses the allowance method to account for bad debts. During 2010, Conroy determined that a balance of $200 for Alegia Co
All of the following are similarities in valuing receivables using U.S. GAAP and IFRS except
expense for estimated uncollectibles must be recorded in the same period as the related
revenues
IFRS does not require the allowance method for uncollectibles
IFRS does Teguire the allowance method
receivables must be reported net of estimated uncollectibles
Conroy Company uses the allowance method to account for bad debts. During 2010, Conroy determined
that a balance of $200 for Alegia Co. was uncollectible and wrote the balance off. What is the total
decrease to net income related to this entry?
Cannot be Determined
$0
$200
When a note's maker is unable or refuses to pay at maturity, the note is considered dishonored.
The allowance for doubtful accounts is a(n) (current;contra/opposite)contra asset account and has a
normal credit balance.
expense for estimated uncollectibles must be recorded in the same period as the related
revenues
IFRS does not require the allowance method for uncollectibles
IFRS does Teguire the allowance method
receivables must be reported net of estimated uncollectibles
Conroy Company uses the allowance method to account for bad debts. During 2010, Conroy determined
that a balance of $200 for Alegia Co. was uncollectible and wrote the balance off. What is the total
decrease to net income related to this entry?
Cannot be Determined
$0
$200
When a note's maker is unable or refuses to pay at maturity, the note is considered dishonored.
The allowance for doubtful accounts is a(n) (current;contra/opposite)contra asset account and has a
normal credit balance.
Lani Co. uses the allowance method to account for bad debts. At the end of 2010, their unadjusted trial balance shows an accounts receivable balance of $400,000
Lani Co. uses the allowance method to account for bad debts. At the end of 2010, their unadjusted trial
balance shows an accounts receivable balance of $400,000; allowance for doubtful accounts balance of
$400 (debit); and sales of $1,200,000. Based on history, Lani estimates that bad debts will be 1% of
accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in
the amount of:
$3,600
$12,400
$4.400
$11,600
$12,000
$4,000
The realization principle under IFRS refers to the following:
risk transfer and ownership reward
an arm's length transaction and economic benefits
reliable measurement and likelihood of economic benefits
Avi Co. raises cash by borrowing $10,000 and pledging $12,000 accounts receivables as security for the
loan. To comply with the full disclosure principle, Avi will record a journal entry in the amount of the
$10,000 note payable, and also record a (debit/credit/note)note to the financial statements, indicating
that $12,000 of accounts receivables have been pledged.
At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible.
Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would
include a:
debit to Allowance for Doubtful Accounts and credit to Bad Debts Expense
debit to Bad Debts Expense and credit to Accounts Receivable
debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts
debit to Accounts Receivable and credit to Bad Debts Expense
balance shows an accounts receivable balance of $400,000; allowance for doubtful accounts balance of
$400 (debit); and sales of $1,200,000. Based on history, Lani estimates that bad debts will be 1% of
accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in
the amount of:
$3,600
$12,400
$4.400
$11,600
$12,000
$4,000
The realization principle under IFRS refers to the following:
risk transfer and ownership reward
an arm's length transaction and economic benefits
reliable measurement and likelihood of economic benefits
Avi Co. raises cash by borrowing $10,000 and pledging $12,000 accounts receivables as security for the
loan. To comply with the full disclosure principle, Avi will record a journal entry in the amount of the
$10,000 note payable, and also record a (debit/credit/note)note to the financial statements, indicating
that $12,000 of accounts receivables have been pledged.
At year-end, Yates Company estimates that $1,500 of its accounts receivable balance is uncollectible.
Yates uses the allowance method to account for bad debts. The entry to record this adjusting entry would
include a:
debit to Allowance for Doubtful Accounts and credit to Bad Debts Expense
debit to Bad Debts Expense and credit to Accounts Receivable
debit to Bad Debts Expense and credit to Allowance for Doubtful Accounts
debit to Accounts Receivable and credit to Bad Debts Expense
Flash Co. uses the allowance method to account for bad debts. At the end of 2010, Flash Co.'s unadjusted trial balance
Flash Co. uses the allowance method to account for bad debts. At the end of 2010, Flash Co.'s
unadjusted trial balance shows an accounts receivable balance of $45,000; allowance for doubtful
accounts balance of $400 (debit); and sales of $1,500,000. Based on history, Flash estimates that bad
debts will be 0.5% of sales. The entry to record estimated bad debts will include an debit to Bad Debts
Expense ln the amount of:
$7,100
$7,500
$795,000
$750,000
$7,900
The ____ method of estimating bad debts uses both past and current receivables information to
estimate the allowance amount. Specifically, each receivable is classified by how long it is past its due
date.
percentage of sales
aging of receivable
percentage of receivables
The following financial information is available for Si u Co.
2010 2009
Net Sales 160,000 155,000
Accounts Receivable 38,000 32,000
Compute accounts receivable turnover for 2010. Round your answer to one decimal place.
4.5
4.6
4.8
4.2
unadjusted trial balance shows an accounts receivable balance of $45,000; allowance for doubtful
accounts balance of $400 (debit); and sales of $1,500,000. Based on history, Flash estimates that bad
debts will be 0.5% of sales. The entry to record estimated bad debts will include an debit to Bad Debts
Expense ln the amount of:
$7,100
$7,500
$795,000
$750,000
$7,900
The ____ method of estimating bad debts uses both past and current receivables information to
estimate the allowance amount. Specifically, each receivable is classified by how long it is past its due
date.
percentage of sales
aging of receivable
percentage of receivables
The following financial information is available for Si u Co.
2010 2009
Net Sales 160,000 155,000
Accounts Receivable 38,000 32,000
Compute accounts receivable turnover for 2010. Round your answer to one decimal place.
4.5
4.6
4.8
4.2
Tricon Co. sells $10,000 of Its accounts receivables and is charged a 5% factoring fee. It records this sale with a debit to:
The ____ method, also referred to as balance sheet method, uses balance sheet relations to
estimate bad debts-mainly, the relationship between accounts receivable and the allowance account.
accounts receivable
allowance
bad debts
percentage of sales
Tricon Co. sells $10,000 of Its accounts receivables and is charged a 5% factoring fee. It records this sale
with a debit to:
Accounts Receivable for $10,000.
Cash for $10,000.
Cash for $10,500.
Cash for $9,500.
Accounts Receivable for $10,500.
Accounts Receivable for $9,500.
Companies sometimes convert receivables to cash before they are due by selling them or using them as
security for a loan. The reasons that a company may convert receivables before their due date include:
(Check all that apply.)
to satisfy customer's needs.
to quickly increase profit.
to reduce risk of nonpayment.
to quickly generate cash.
Although U.S. GMP and IFRS have similar rules in recording disposition of receivables, Under U.S. GMP
provision refers to expense. Under IFRS, provision refers to
An asset
A liability
A revenue
estimate bad debts-mainly, the relationship between accounts receivable and the allowance account.
accounts receivable
allowance
bad debts
percentage of sales
Tricon Co. sells $10,000 of Its accounts receivables and is charged a 5% factoring fee. It records this sale
with a debit to:
Accounts Receivable for $10,000.
Cash for $10,000.
Cash for $10,500.
Cash for $9,500.
Accounts Receivable for $10,500.
Accounts Receivable for $9,500.
Companies sometimes convert receivables to cash before they are due by selling them or using them as
security for a loan. The reasons that a company may convert receivables before their due date include:
(Check all that apply.)
to satisfy customer's needs.
to quickly increase profit.
to reduce risk of nonpayment.
to quickly generate cash.
Although U.S. GMP and IFRS have similar rules in recording disposition of receivables, Under U.S. GMP
provision refers to expense. Under IFRS, provision refers to
An asset
A liability
A revenue
Acel Co. uses the allowance method to account for bad debts. Early In 2010, Ace I determined that It could not collect $400 from CTR
Acel Co. uses the allowance method to account for bad debts. Early In 2010, Ace I determined that It
could not collect $400 from CTR, Inc. and wrote the balance off. On October 21, Acel received a check for
$400 from CTR. The entries to record the receipt of cash on October 21 would include a debit to:
Select two answers .
could not collect $400 from CTR, Inc. and wrote the balance off. On October 21, Acel received a check for
$400 from CTR. The entries to record the receipt of cash on October 21 would include a debit to:
Select two answers .
Accounts Receivable.
Accounts receivable is debited to reinstate
Allowance for Doubtful Accounts.
Bad Debt Expense.
cash.
Zlno Company determines that a customer balance of $200,from Hollis Co. is uncollectible. Zino uses the
allowance method to account for bad debts. The entry to write off the uncollectible balance will include a:
debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts.
debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
debit to Allowance for Doubtful Accounts and a credit to Bad Debts Expense.
The expected proceeds from accounts receivable, determined by taking accounts receivable less the
allowance for doubtful accounts, is called:
contra receivables
accounts receivable turnover
total receivables
realizable value
The principal and interest of a note are due on its maturity date. The maker of the note usually
(makes/honors/dishonors)honors the note and pays it in full.
Companies sometimes convert receivables to cash before they are due. When a company sells its
receivables, it is called factoring (pledging/factoring). When a company uses receivables as collateral for
a bank loan, it is called pledging (pledging/factoring).
On November 1, Alice Co. accepted a 9Q..day, 6%, 2,000 note due January 30. On 12/31, the appropriate adjusting entry was made on 12/31
On November 1, Alice Co. accepted a 9Q..day, 6%, 2,000 note due January 30. On 12/31, the appropriate adjusting entry was made on 12/31. On January 30, the note was honored and paid in full. The entry to record receipt of payment on January 30 would include a credit to: (Check all that apply.)
Interest Receivable for $20.
Cash for $2,030.
Notes Receivable for $2,000
Interest Revenue for $30.
Interest Revenue for $20.
Interest Revenue for $10.
DonCo, Inc. sold merchandise on January 14, and accepted a 90-day, 5% promissory note in the amount
of $5,000. On January 14, the entry to record this transaction would include a debit to:
Notes Receivable In the amount of $5,000
Sales in the amount of $5,000
Accounts Receivable In the amount of $5,000
Cash in the amount of $5,000
Kaiven Company accepted a $12,000, 60-day, 6% note on December 21 from Diaz Co, granting a time
extension on his past-due account receivable. The adjusting entry on December 31 would include a debit
to:
Interest Receivable for $120.
Interest Receivable for $20.
Interest Revenue for $120.
Interest Revenue for $20.
Interest Receivable for $20.
Cash for $2,030.
Notes Receivable for $2,000
Interest Revenue for $30.
Interest Revenue for $20.
Interest Revenue for $10.
DonCo, Inc. sold merchandise on January 14, and accepted a 90-day, 5% promissory note in the amount
of $5,000. On January 14, the entry to record this transaction would include a debit to:
Notes Receivable In the amount of $5,000
Sales in the amount of $5,000
Accounts Receivable In the amount of $5,000
Cash in the amount of $5,000
Kaiven Company accepted a $12,000, 60-day, 6% note on December 21 from Diaz Co, granting a time
extension on his past-due account receivable. The adjusting entry on December 31 would include a debit
to:
Interest Receivable for $120.
Interest Receivable for $20.
Interest Revenue for $120.
Interest Revenue for $20.
On January 1, Franz Co. accepted a 3o-day, 6% note in the amount of $5,000 from Bria Co., a customer. On January 31, the due date of the note
JD Co. had $1,000 of credit cards sales. The net cash receipts were deposited Immediately Into
Whitlock's bank account less a 3% fee. The entry to record this sales transaction would include the
following debit entries. (Check all that apply.)
Sales for $970
Cash for $970
Accounts Receivable for $970
Accounts Receivable for $1,000
Credit card Expense for $30
cash for $1,000
The _____ method of accounting for bad debts records the loss from an uncollectible account
receivable when it is determined to be uncollectible. No attempt is made to predict bad debts expense.
percentage of sales
direct write-off
allowance
percentage of receivables
On January 1, Franz Co. accepted a 3o-day, 6% note in the amount of $5,000 from Bria Co., a customer.
On January 31, the due date of the note, Bria honors the note and pays In full. The journal entry that
Franz would make to record payment of this note would include a: (Check all that apply.)
debit to Cash for $5,025.
credit to Note Receivable for $5,025.
credit to Note Receivable for $5,000.
debit to Interest Revenue for $25.
credit to Interest Revenue for $25.
Whitlock's bank account less a 3% fee. The entry to record this sales transaction would include the
following debit entries. (Check all that apply.)
Sales for $970
Cash for $970
Accounts Receivable for $970
Accounts Receivable for $1,000
Credit card Expense for $30
cash for $1,000
The _____ method of accounting for bad debts records the loss from an uncollectible account
receivable when it is determined to be uncollectible. No attempt is made to predict bad debts expense.
percentage of sales
direct write-off
allowance
percentage of receivables
On January 1, Franz Co. accepted a 3o-day, 6% note in the amount of $5,000 from Bria Co., a customer.
On January 31, the due date of the note, Bria honors the note and pays In full. The journal entry that
Franz would make to record payment of this note would include a: (Check all that apply.)
debit to Cash for $5,025.
credit to Note Receivable for $5,025.
credit to Note Receivable for $5,000.
debit to Interest Revenue for $25.
credit to Interest Revenue for $25.
Tuesday, November 26, 2019
On March 14, Ian Co. accepted a 180-day, 5% note in the amount of $1,000 from Ali Co., a customer. On the due date of the note
On March 14, Ian Co. accepted a 180-day, 5% note in the amount of $1,000 from Ali Co., a customer. On
the due date of the note, Ali dishonors the note and fails to pay. The journal entry that Ian would record
on the due date would include a: (Check all that apply.)
debit to Accounts Receivable -All for $1,025.
$1,000 x (180/360) x .05 = $25 interest
debit to Interest Revenue for $25.
credit to Notes Receivable for $1,000.
credit to Accounts Receivable -Ali for $1,000.
debit to Notes Receivable for $1,025.
credit to Interest Revenue for $25.
1,000 x (1.80/360) x .05= $25 interest
On February 15, Symth Co. determines that It cannot collect $500 owed by Its customer, A. Winds. Symth
records the loss using the direct write-off method. This entry to record the write-off on February 15 would
Include a: (Check all that apply.)
credit to Bad Debts Expense.
credit to Sales.
debit to Sales.
debit to Accounts Receivable - A. Winds.
debit to Bad Debts Expense.
credit to Accounts Receivable - A. Winds.
Simon Co. sold $500 of merchandise on credit cards. The net cash receipts are received 10 days later,
less a 2% fee. The entry to record this sales transaction on the date of the sale would Include a debit to:
cash for $490
Sales for $490
cash for $500
Sales for $500
Accounts Receivable for $500
Accounts Receivable for $490
the due date of the note, Ali dishonors the note and fails to pay. The journal entry that Ian would record
on the due date would include a: (Check all that apply.)
debit to Accounts Receivable -All for $1,025.
$1,000 x (180/360) x .05 = $25 interest
debit to Interest Revenue for $25.
credit to Notes Receivable for $1,000.
credit to Accounts Receivable -Ali for $1,000.
debit to Notes Receivable for $1,025.
credit to Interest Revenue for $25.
1,000 x (1.80/360) x .05= $25 interest
On February 15, Symth Co. determines that It cannot collect $500 owed by Its customer, A. Winds. Symth
records the loss using the direct write-off method. This entry to record the write-off on February 15 would
Include a: (Check all that apply.)
credit to Bad Debts Expense.
credit to Sales.
debit to Sales.
debit to Accounts Receivable - A. Winds.
debit to Bad Debts Expense.
credit to Accounts Receivable - A. Winds.
Simon Co. sold $500 of merchandise on credit cards. The net cash receipts are received 10 days later,
less a 2% fee. The entry to record this sales transaction on the date of the sale would Include a debit to:
cash for $490
Sales for $490
cash for $500
Sales for $500
Accounts Receivable for $500
Accounts Receivable for $490
A. Stine Co. previously wrote off a $200 bad debt from Thorn Co. using the direct write-off method. On October 1, Stine unexpectedly receives a check
In July, Lane Co. sells merchandise to Avery Co. on account. In August, Avery pays the balance in full. The
entry that Lane will make to record the receipt of cash will include a credit to the account.
Accounts Payable
Sales
Accounts Receivable
Cash
Unearned Sales
To compute interest due on a maturity date, you should multiply which of the following factors? (Check all
that apply.)
Time expressed in fraction of year
Maturity value
Principal
Interest Rate
On June 30, Nance Company receives a $5,000, 90-day, 4% note from a customer as payment on her
account How much interest will be due on the note's maturity date?
$225
$50
$200
$25
A 90-day note is signed on October 21. The due date of the note is:
January 21
January 20
January 18
January 19
A. Stine Co. previously wrote off a $200 bad debt from Thorn Co. using the direct write-off method. On
October 1, Stine unexpectedly receives a check in the amount of $200 from Thom Co. The entry to record
this receipt of $200 will include a: (Check all that apply.)
credit to cash.
debit to cash.
credit to Bad Debts Expense
debit to Bad Debts Expense
entry that Lane will make to record the receipt of cash will include a credit to the account.
Accounts Payable
Sales
Accounts Receivable
Cash
Unearned Sales
To compute interest due on a maturity date, you should multiply which of the following factors? (Check all
that apply.)
Time expressed in fraction of year
Maturity value
Principal
Interest Rate
On June 30, Nance Company receives a $5,000, 90-day, 4% note from a customer as payment on her
account How much interest will be due on the note's maturity date?
$225
$50
$200
$25
A 90-day note is signed on October 21. The due date of the note is:
January 21
January 20
January 18
January 19
A. Stine Co. previously wrote off a $200 bad debt from Thorn Co. using the direct write-off method. On
October 1, Stine unexpectedly receives a check in the amount of $200 from Thom Co. The entry to record
this receipt of $200 will include a: (Check all that apply.)
credit to cash.
debit to cash.
credit to Bad Debts Expense
debit to Bad Debts Expense
The following information is available for Johnson Manufacturing Company at June 30:
1. The following information is available for Holland Company at December 31:
Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of:
$35,421
2. The following information is available for Johnson Manufacturing Company at June 30:
Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
$19,462
3. At the end of the current period, a company reported $475,000 in net credit sales and $75,000 in ending
accounts receivable. Calculate this company's days' sales uncollected at the end of the current period.
57.63 days
4. On August 17, at the end of the day, the cash register's record shows $957, but the count of cash in the
register is $965. Prepare the general journal entry to record the day's cash sales.
Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of:
$35,421
2. The following information is available for Johnson Manufacturing Company at June 30:
Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
$19,462
3. At the end of the current period, a company reported $475,000 in net credit sales and $75,000 in ending
accounts receivable. Calculate this company's days' sales uncollected at the end of the current period.
57.63 days
4. On August 17, at the end of the day, the cash register's record shows $957, but the count of cash in the
register is $965. Prepare the general journal entry to record the day's cash sales.
Following are seven items a through g that would cause Xavier Company's book balance of cash ($2,451)to differ from its bank statement balance of cash. ($2,000)
A company established a petty cash fund of $100 on September 1. On September 10, the petty cash fund was
replenished when there was $16 remaining and there were petty cash receipts for: office supplies, $27;
transportation-in on inventory purchased, $32; and postage, $22. On September 15, the petty cash fund was
increased to $125 in total. Record the above transactions in general journal form.
Following are seven items a through g that would cause Xavier Company's book balance of cash ($2,451)to
differ from its bank statement balance of cash. ($2,000)
a. A service charge imposed by the bank.$20
b. A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this
month.$100
c. A customer's check returned by the bank is marked "Not Sufficient Funds(NSF)".$200
d. A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's
bank statement.$700
e. A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at
$109.
f. An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company
and deposited the proceeds in the company's account.$300
g. A check was written in the current period that is not yet paid or returned by the bank.$150
Indicate where each item a through g would appear on Xavier Company's bank reconciliation by placing its
identifying letter in the parentheses in the proper section of the form below.
replenished when there was $16 remaining and there were petty cash receipts for: office supplies, $27;
transportation-in on inventory purchased, $32; and postage, $22. On September 15, the petty cash fund was
increased to $125 in total. Record the above transactions in general journal form.
Following are seven items a through g that would cause Xavier Company's book balance of cash ($2,451)to
differ from its bank statement balance of cash. ($2,000)
a. A service charge imposed by the bank.$20
b. A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this
month.$100
c. A customer's check returned by the bank is marked "Not Sufficient Funds(NSF)".$200
d. A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's
bank statement.$700
e. A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at
$109.
f. An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company
and deposited the proceeds in the company's account.$300
g. A check was written in the current period that is not yet paid or returned by the bank.$150
Indicate where each item a through g would appear on Xavier Company's bank reconciliation by placing its
identifying letter in the parentheses in the proper section of the form below.
The Betsy Dough Company wants to prepare a bank reconciliation for the month of June. When the bank statement for the month of June arrives from the bank
The Betsy Dough Company wants to prepare a bank reconciliation for the
month of June. When the bank statement for the month of June arrives
from the bank, the following steps are performed:
1. The deposits to the bank account, as recorded on the bank statement,
are compared to the deposit slips retained by the company. It is noted
that the last deposit, of $400, occurred after banking hours on the day of
the bank statement and therefore has not been recorded by the bank on
this bank statement.
2. Checks returned with the bank statement are compared to the checks
written and listed in checkbook. This comparison shows that there are
checks outstanding amounting to $1,456.
3. The ending balances on the statement and in the company’s books are
determined. The ending bank statement balance is exactly $10,129
whereas the books show $9,000.
4. Other information contained on the bank statement, not previously
known to the company, is determined. This includes the following: (a) a
note from a customer for $200 has been collected by the bank and
credited to our account; (b) a check from Frank Ony for $120 previously
deposited by us has been returned for lack of sufficient funds; (c) the
bank has charged us $25 for its services (this includes a $10 fee for the
NSF check).
5. A bank reconciliation is prepared; it does not balance! The difference is
$18, so a transposition error is looked for (whenever the difference is a
multiple of 9, there is a very good chance that there has been an
inadvertent exchange of two digits (for example, writing 29 when it
should have been 92). An error is found. Check number 141 was written
for $235 and cleared the bank for $235, but was recorded in the
company records as $253.
Required:
1)Prepare a bank reconciliation for the Betsy Dough Company at June 30,
2011.
2)Prepare the appropriate journal entries.
month of June. When the bank statement for the month of June arrives
from the bank, the following steps are performed:
1. The deposits to the bank account, as recorded on the bank statement,
are compared to the deposit slips retained by the company. It is noted
that the last deposit, of $400, occurred after banking hours on the day of
the bank statement and therefore has not been recorded by the bank on
this bank statement.
2. Checks returned with the bank statement are compared to the checks
written and listed in checkbook. This comparison shows that there are
checks outstanding amounting to $1,456.
3. The ending balances on the statement and in the company’s books are
determined. The ending bank statement balance is exactly $10,129
whereas the books show $9,000.
4. Other information contained on the bank statement, not previously
known to the company, is determined. This includes the following: (a) a
note from a customer for $200 has been collected by the bank and
credited to our account; (b) a check from Frank Ony for $120 previously
deposited by us has been returned for lack of sufficient funds; (c) the
bank has charged us $25 for its services (this includes a $10 fee for the
NSF check).
5. A bank reconciliation is prepared; it does not balance! The difference is
$18, so a transposition error is looked for (whenever the difference is a
multiple of 9, there is a very good chance that there has been an
inadvertent exchange of two digits (for example, writing 29 when it
should have been 92). An error is found. Check number 141 was written
for $235 and cleared the bank for $235, but was recorded in the
company records as $253.
Required:
1)Prepare a bank reconciliation for the Betsy Dough Company at June 30,
2011.
2)Prepare the appropriate journal entries.
Nolan Company deposits all cash receipts on the day when they are received and it makes all cash payments by check.
Nolan Company deposits all cash receipts on the day when they are received and it makes all cash
payments by check. At the close of business on June 30, 2013, its Cash account shows an $22,352
debit balance. Nolan's June 30 bank statement shows $21,332 on deposit in the bank.
a. Outstanding checks as of June 30 total $3,713.
b. The June 30 bank statement included a $41 debit memorandum for bank services; the company has
not yet recorded the cost of these services.
c. In reviewing the bank statement, a $90 check written by the Company was mistakenly recorded in
the company's books at $99.
d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and
were not recorded on the June 30 bank statement.
e. The bank statement included a $23 credit for interest earned on the cash in the bank.
Prepare a bank reconciliation for Nolan Company using the above information.
payments by check. At the close of business on June 30, 2013, its Cash account shows an $22,352
debit balance. Nolan's June 30 bank statement shows $21,332 on deposit in the bank.
a. Outstanding checks as of June 30 total $3,713.
b. The June 30 bank statement included a $41 debit memorandum for bank services; the company has
not yet recorded the cost of these services.
c. In reviewing the bank statement, a $90 check written by the Company was mistakenly recorded in
the company's books at $99.
d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and
were not recorded on the June 30 bank statement.
e. The bank statement included a $23 credit for interest earned on the cash in the bank.
Prepare a bank reconciliation for Nolan Company using the above information.
Waupaca Company establishes a $420 petty cash fund on September 9. On September 30, the fund shows $164 in cash along with receipts
Waupaca Company establishes a $420 petty cash fund on September 9. On September 30, the fund
shows $164 in cash along with receipts for the following expenditures: transportation costs of
merchandise inventory purchased, $47; postage expenses, $74; and miscellaneous expenses, $132.
The petty cashier could not account for a $3 shortage in the fund. Waupaca uses the perpetual system in accounting for merchandise inventory.
(1)Prepare the September 9 entry to establish the fund.
(2) Prepare the September 30 entry to reimburse the fund.
(3)Prepare an October 1 entry to increase the fund to $470.
1. For each of the following items, indicate whether its amount affects the bank or book side of a bank
reconciliation and represents an addition or a subtraction in a bank reconciliation and whether an
adjusting journal entry is required:
shows $164 in cash along with receipts for the following expenditures: transportation costs of
merchandise inventory purchased, $47; postage expenses, $74; and miscellaneous expenses, $132.
The petty cashier could not account for a $3 shortage in the fund. Waupaca uses the perpetual system in accounting for merchandise inventory.
(1)Prepare the September 9 entry to establish the fund.
(2) Prepare the September 30 entry to reimburse the fund.
(3)Prepare an October 1 entry to increase the fund to $470.
1. For each of the following items, indicate whether its amount affects the bank or book side of a bank
reconciliation and represents an addition or a subtraction in a bank reconciliation and whether an
adjusting journal entry is required:
Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check.
Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash
payments by check. At the close of business -on June 30, 2013, its Cash account shows a $11,589 debit
balance. Del Gato Clinic's June 30 bank statement shows $10,555 on deposit in the bank.
a. Outstanding checks as of June 30 total $1,829.
b. The June 30 bank statement included a $ 16 debit memorandum for bank services.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $467 in payment of a utility
bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit
to Cash in the amount of $4 76.
d. The June 30 cash receipts of $2,856 were placed in the bank's night depository after banking hours
and were not recorded on the June 30 bank statement.
Prepare the adjusting journal entries that Del Gato Clinic must record as a result of preparing the bank
reconciliation. (If no entry is required for a particular event, select "No journal entry required" in the
first account field.)
payments by check. At the close of business -on June 30, 2013, its Cash account shows a $11,589 debit
balance. Del Gato Clinic's June 30 bank statement shows $10,555 on deposit in the bank.
a. Outstanding checks as of June 30 total $1,829.
b. The June 30 bank statement included a $ 16 debit memorandum for bank services.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $467 in payment of a utility
bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit
to Cash in the amount of $4 76.
d. The June 30 cash receipts of $2,856 were placed in the bank's night depository after banking hours
and were not recorded on the June 30 bank statement.
Prepare the adjusting journal entries that Del Gato Clinic must record as a result of preparing the bank
reconciliation. (If no entry is required for a particular event, select "No journal entry required" in the
first account field.)
Palmona Co. establishes a $220 petty cash fund on January 1. On January 8, the fund shows $123 in cash along with receipts for the following expenditures: postage
Palmona Co. establishes a $220 petty cash fund on January 1. On January 8, the fund shows $123 in
cash along with receipts for the following expenditures: postage, $4 1; transportation-in, $ 12; delivery
expenses, $ 14; and miscellaneous expenses, $30. Palmona uses the perpetual system in accounting
for merchandise inventory.
(1) Prepare journal entry to establish the fund on January.
(2) Prepare journal entry to reimburse it on January 8.
(3)Prepare journal entries to both reimburse the fund and increase it to $270 on January 8, assuming
no entry in part 2.
cash along with receipts for the following expenditures: postage, $4 1; transportation-in, $ 12; delivery
expenses, $ 14; and miscellaneous expenses, $30. Palmona uses the perpetual system in accounting
for merchandise inventory.
(1) Prepare journal entry to establish the fund on January.
(2) Prepare journal entry to reimburse it on January 8.
(3)Prepare journal entries to both reimburse the fund and increase it to $270 on January 8, assuming
no entry in part 2.
Nolan Company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2013
Nolan Company deposits all cash receipts on the day when they are received and it makes all cash
payments by check. At the close of business on June 30, 2013, its Cash account shows an $22,352
debit balance. Nolan's June 30 bank statement shows $21,332 on deposit in the bank.
a. Outstanding checks as of June 30 total $3,713.
b. The June 30 bank statement included a $41 debit memorandum for bank services; the company has
not yet recorded the cost of these services.
c. In reviewing the bank statement, a $90 check written by the Company was mistakenly recorded in
the company's books at $99.
d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and
were not recorded on the June 30 bank statement.
e. The bank statement included a $23 credit for interest earned on the cash in the bank.
Prepare a bank reconciliation for Nolan Company using the above information.
payments by check. At the close of business on June 30, 2013, its Cash account shows an $22,352
debit balance. Nolan's June 30 bank statement shows $21,332 on deposit in the bank.
a. Outstanding checks as of June 30 total $3,713.
b. The June 30 bank statement included a $41 debit memorandum for bank services; the company has
not yet recorded the cost of these services.
c. In reviewing the bank statement, a $90 check written by the Company was mistakenly recorded in
the company's books at $99.
d. June 30 cash receipts of $4,724 were placed in the bank's night depository after banking hours and
were not recorded on the June 30 bank statement.
e. The bank statement included a $23 credit for interest earned on the cash in the bank.
Prepare a bank reconciliation for Nolan Company using the above information.
Nakashima Gallery had the following petty cash transactions in February of the current year. Wrote a $400 check, cashed it,
Nakashima Gallery had the following petty cash transactions in February of the current year.
Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe
Addison, the petty cashier.
Purchased bond paper for the copier for $14.15 that is immediately used.
Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB
shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
Paid $7.95 postage to express mail a contract to a client.
Reimbursed Adina Sharon, the manager, $68 for business mileage on her car.
Purchased stationery for $67.77 that is immediately used.
Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
Paid $13.10 COD shipping charges on mercl1andise purchased for resale, terms FOB
shipping point.
Paid $54 for postage expenses.
The fund had $120.42 remaining in the petty cash box. Sorted the petty cash receipts by
accounts affected and exc11anged them for a check to reimburse the fund for expenditures.
The petty cash fund amount is increased by $100 to a total of $500.
Required:
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage
expense, postage expense, merchandise inventory (for transportation-in), and office supplies
expense. Sort the payments into the appropriate categories and total the expenditures in each
category. (Round your answers to 2 decimal places.)
3. Prepare the journal entries for part 2 to both (a) reimburse and (IJ) increase the fund amount.
(Round your answers to 2 decimal places.)
Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe
Addison, the petty cashier.
Purchased bond paper for the copier for $14.15 that is immediately used.
Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB
shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
Paid $7.95 postage to express mail a contract to a client.
Reimbursed Adina Sharon, the manager, $68 for business mileage on her car.
Purchased stationery for $67.77 that is immediately used.
Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
Paid $13.10 COD shipping charges on mercl1andise purchased for resale, terms FOB
shipping point.
Paid $54 for postage expenses.
The fund had $120.42 remaining in the petty cash box. Sorted the petty cash receipts by
accounts affected and exc11anged them for a check to reimburse the fund for expenditures.
The petty cash fund amount is increased by $100 to a total of $500.
Required:
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage
expense, postage expense, merchandise inventory (for transportation-in), and office supplies
expense. Sort the payments into the appropriate categories and total the expenditures in each
category. (Round your answers to 2 decimal places.)
3. Prepare the journal entries for part 2 to both (a) reimburse and (IJ) increase the fund amount.
(Round your answers to 2 decimal places.)
Define the Discounts Lost account by selecting the statements below that correctly describe this account
Describe the purpose of a purchase order by selecting the correct statement(s) below. (Check all that
apply.)
Multiple copies of the purchase order are distributed to other departments to Increase Internal
control of company purchases.
A purchase order authorizes a vendor to ship ordered merchandise at a stated price and terms.
A purchase order is a document the purchasing department uses to place an order with a vendor.J
A purchase order is a bill received from the vendor that reflects the amount owed by the buyer.
Determine which of the statements below describes a petty cash receipt. (Check all that apply.)
All petty cash receipts are turned in to the company cashier at the end of each day.
The petty cashier must present all paid receipts to the company cashier in order to replenish the
fund.
A petty cash receipt is rarely prenumbered.
A petty cash receipt will have a signature line for the person receiving a disbursement from the
fund.
A petty cash receipt is sometimes called a petty cash ticket.
Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt.
Define the Discounts Lost account by selecting the statements below that correctly describe this account
(Check all that apply.)
This account alerts management when discounts are not taken for early payment.
Because an account is set up to record the discounts, managements alerted to discounts not
taken.
It is debited when a discount is not taken and when using the gross method of recording
purchases.
It is reported on the income statement
It is an expense account.
It is reported on the balance sheet.
It is debited when a discount is not taken and when using the net method of recording purchases)
Multiple copies of the purchase order are distributed to other departments to Increase Internal
control of company purchases.
A purchase order authorizes a vendor to ship ordered merchandise at a stated price and terms.
A purchase order is a document the purchasing department uses to place an order with a vendor.J
A purchase order is a bill received from the vendor that reflects the amount owed by the buyer.
Determine which of the statements below describes a petty cash receipt. (Check all that apply.)
All petty cash receipts are turned in to the company cashier at the end of each day.
The petty cashier must present all paid receipts to the company cashier in order to replenish the
fund.
A petty cash receipt is rarely prenumbered.
A petty cash receipt will have a signature line for the person receiving a disbursement from the
fund.
A petty cash receipt is sometimes called a petty cash ticket.
Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt.
Define the Discounts Lost account by selecting the statements below that correctly describe this account
(Check all that apply.)
This account alerts management when discounts are not taken for early payment.
Because an account is set up to record the discounts, managements alerted to discounts not
taken.
It is debited when a discount is not taken and when using the gross method of recording
purchases.
It is reported on the income statement
It is an expense account.
It is reported on the balance sheet.
It is debited when a discount is not taken and when using the net method of recording purchases)
Which of the statements below explains how technology has Impacted Internal control systems? (Check all that apply.)
Determine which of the statements below accurately describe services provided by a bank. (Check all
that apply.}
Each bank deposit is supported by a check.
To withdraw money from an account, the depositor can use a check.
Each bank deposit is supported by a deposit ticket.
To limit access to a bank account, all persons authorized to write checks on the account must
sign a deposit slip.
A bank account is a record set up by a bank for a customer.
Given the choices below, choose the examples of internal controls designed to control cash
disbursements. (Check all that apply.)
Use of a petty cash system.
The person in charge of purchasing and receiving should be the only person authorized to pay.
All disbursements should be made by check.
Only authorized individuals should be allowed to sign checks.
Use of a voucher system.
Which of the statements below explains how technology has Impacted Internal control systems? (Check
all that apply.)
that apply.}
Each bank deposit is supported by a check.
To withdraw money from an account, the depositor can use a check.
Each bank deposit is supported by a deposit ticket.
To limit access to a bank account, all persons authorized to write checks on the account must
sign a deposit slip.
A bank account is a record set up by a bank for a customer.
Given the choices below, choose the examples of internal controls designed to control cash
disbursements. (Check all that apply.)
Use of a petty cash system.
The person in charge of purchasing and receiving should be the only person authorized to pay.
All disbursements should be made by check.
Only authorized individuals should be allowed to sign checks.
Use of a voucher system.
Which of the statements below explains how technology has Impacted Internal control systems? (Check
all that apply.)
Technologically advanced systems can record who made entries, the date and time of the entry
and the source of the entry.
Technology has reduced the number of processing errors.
Technology can be designed to require the use of password before access to the system is
granted.
Technology has encouraged the growth of e-commerce, so there is a higher risk of credit card
number theft
Technology Increases Job creation and fewer Job consolidations.
The following annual account balances are taken from A BC Co at year end. 2015 2014
Describe the internal control principle of dividing responsibility for related transactions by selecting the
correct statements below. (Check all that apply.)
Examples of transactions with divided responsibility are placing purchase orders and paying
vendors.
This principle calls for a duplication of work so that comparisons can be made.
This principle is often called separation of duties.
This principle helps to make sure that the work of one individual acts as a check on another
individual's work on a related transaction.
The following annual account balances are taken from A BC Co at year end.
2015 2014
Accounts Receivable $5,500 $4,000
Net Sales $58,000 $55,000
Days sales uncollected days ? days
Calculate ABC Co.'s days sales uncollected for 2015.
34.6days
15.06days
38.49 days
26.54days
Which of the statements below describe the goals and principles of cash management? (Check all that
apply.)
Encourage quick payment of liabilities.
Keep a minimum level of cash necessary to operate.
Plan cash receipts to meet cash payments when due.
Excess cash should be kept on hand to pay bills.
Encourage quick collection of receivables.
Money should be spent only when It Is available.
correct statements below. (Check all that apply.)
Examples of transactions with divided responsibility are placing purchase orders and paying
vendors.
This principle calls for a duplication of work so that comparisons can be made.
This principle is often called separation of duties.
This principle helps to make sure that the work of one individual acts as a check on another
individual's work on a related transaction.
The following annual account balances are taken from A BC Co at year end.
2015 2014
Accounts Receivable $5,500 $4,000
Net Sales $58,000 $55,000
Days sales uncollected days ? days
Calculate ABC Co.'s days sales uncollected for 2015.
34.6days
15.06days
38.49 days
26.54days
Which of the statements below describe the goals and principles of cash management? (Check all that
apply.)
Encourage quick payment of liabilities.
Keep a minimum level of cash necessary to operate.
Plan cash receipts to meet cash payments when due.
Excess cash should be kept on hand to pay bills.
Encourage quick collection of receivables.
Money should be spent only when It Is available.
Identify the items below which are correct statements about the similarities and differences between IFRS and U. S. GAAP
Identify the items below which are correct statements about the similarities and differences between
IFRS and U. S. GAAP in regards to internal controls and in the accounting and reporting of cash. (Check all
that apply.)
Accounting definitions for cash are similar for U.S. GAAP and IFRS.
GAAP and IFRS strongly support procedures aimed at controlling cash receipts and
disbursements.
GAAP, but not IFRS, encourages the use of a bank statement to check the accuracy of the
general ledger cash account.
Both U.S. GAAP and IFRS support enhanced internal controls.
Which of the statements below describes the internal control principle of applying technological controls?
The person In charge of creating technology controls should not be the person who installs the
technology control.
Technological controls for assets should be separated from custody over those assets.
Technological controls, such as time clocks and cash registers, improve the effectiveness of
controls.
A responsibility for a transaction should be divided between two or more Individuals or
departments
Which of the statements below explains the Internal control principle of performing regular and
Independent reviews?
Using preprinted forms and internal documents are designed to be an Independent review of
transactions.
Using personal identification scanners are an appropriate regular and Independent review.
Regular reviews of Internal control systems are needed to ensure that procedures are followed.
Responsibility for a task Is clearly established and assigned to one person who does a regular
review of these tasks to verify accuracy.
IFRS and U. S. GAAP in regards to internal controls and in the accounting and reporting of cash. (Check all
that apply.)
Accounting definitions for cash are similar for U.S. GAAP and IFRS.
GAAP and IFRS strongly support procedures aimed at controlling cash receipts and
disbursements.
GAAP, but not IFRS, encourages the use of a bank statement to check the accuracy of the
general ledger cash account.
Both U.S. GAAP and IFRS support enhanced internal controls.
Which of the statements below describes the internal control principle of applying technological controls?
The person In charge of creating technology controls should not be the person who installs the
technology control.
Technological controls for assets should be separated from custody over those assets.
Technological controls, such as time clocks and cash registers, improve the effectiveness of
controls.
A responsibility for a transaction should be divided between two or more Individuals or
departments
Which of the statements below explains the Internal control principle of performing regular and
Independent reviews?
Using preprinted forms and internal documents are designed to be an Independent review of
transactions.
Using personal identification scanners are an appropriate regular and Independent review.
Regular reviews of Internal control systems are needed to ensure that procedures are followed.
Responsibility for a task Is clearly established and assigned to one person who does a regular
review of these tasks to verify accuracy.
ABC Co. purchased merchandise on August 5 at a $1,000 invoice price with terms of 2/10,n/30 and paid for the merchandise on August 14.
In preparing a monthly bank reconciliation, a business follows several steps. Place the selected steps
below in the correct order of occurrence.
Identify the bank statement balance then add any deposits in transit and subtract any
outstanding checks.
Compute the adjusted bank balance.
Identify the company's book balance.
Add any unrecorded credit memoranda from the bank, interest earned, and errors understating
the book balance.
Identify and list any unrecorded debit memoranda from the bank, service charges, and errors
overstating the book balance.
Compute the adjusted book balance and compare it to the adjusted bank balance to verify
equality.
Brown Co. decides to increase the amount in its petty cash fund from 100 to $150. To show this increase
in the petty cash account, you would:
debit Petty cash for $50.
debit Petty Cash for $150.
credit Cash for $150.
debit cash for $50.
ABC Co. purchased merchandise on August 5 at a $1,000 invoice price with terms of 2/10,n/30 and paid
for the merchandise on August 14. Determine its entry to record this purchase and the subsequent
payment under both the gross method and the net method by matching the action on the left with the
method on the right. (Assume a perpetual inventory system.)
Cash would be credited for $980 on August Both methods
14.
Merchandise inventory would be debited for Net rnethod
$980 on August 5.
Merchandise Inventory would be credited for Gross method
$20 on August 14.
Discounts Lost would be debited for $20 on Neither method
August 14.
below in the correct order of occurrence.
Identify the bank statement balance then add any deposits in transit and subtract any
outstanding checks.
Compute the adjusted bank balance.
Identify the company's book balance.
Add any unrecorded credit memoranda from the bank, interest earned, and errors understating
the book balance.
Identify and list any unrecorded debit memoranda from the bank, service charges, and errors
overstating the book balance.
Compute the adjusted book balance and compare it to the adjusted bank balance to verify
equality.
Brown Co. decides to increase the amount in its petty cash fund from 100 to $150. To show this increase
in the petty cash account, you would:
debit Petty cash for $50.
debit Petty Cash for $150.
credit Cash for $150.
debit cash for $50.
ABC Co. purchased merchandise on August 5 at a $1,000 invoice price with terms of 2/10,n/30 and paid
for the merchandise on August 14. Determine its entry to record this purchase and the subsequent
payment under both the gross method and the net method by matching the action on the left with the
method on the right. (Assume a perpetual inventory system.)
Cash would be credited for $980 on August Both methods
14.
Merchandise inventory would be debited for Net rnethod
$980 on August 5.
Merchandise Inventory would be credited for Gross method
$20 on August 14.
Discounts Lost would be debited for $20 on Neither method
August 14.
At the end of the month, Brown Co.'s petty cash fund contains $4 in cash and receipts for postage of $50 and delivery expenses of $46.
At the end of the month, Brown Co.'s petty cash fund contains $4 in cash and receipts for postage of $50
and delivery expenses of $46. It started out with $100 in the fund at the beginning of the month.
Demonstrate the journal entry to replenish the account by choosing the correct action from those given
below.
Petty Cash is debited for $96.
Cash is credited for $96.
Petty Cash is credited for $96.
Gash Is debited for $96.
and delivery expenses of $46. It started out with $100 in the fund at the beginning of the month.
Demonstrate the journal entry to replenish the account by choosing the correct action from those given
below.
Petty Cash is debited for $96.
Cash is credited for $96.
Petty Cash is credited for $96.
Gash Is debited for $96.
Which of the following are correct regarding why management uses internal controls? (Check all that
apply.)
Ensure reliable accounting.
Increase revenues.
Reduce vendor payables.
Protect assets.
Urge adherence to company policies.
Promote efficient operations.
Determine which of the items below would appear in the Checks and Debits column of a bank statement and would cause a decline in the account's balance.
Calculate the adjusted cash balance or the books of XYZ Co. given the following information.
Balance per bank statement
Balance per general ledger cash account
Deposit in transit
Note collected by the bank on behalf of the deposit for
Monthly bank charges
Outstanding checks
$600
710
200
80
40
50
$950
$990
$750
Beg bal. $710 +Note $80-bank charges $40.
$630
Determine which of the items below would appear in the Checks and Debits column of a bank statement
and would cause a decline in the account's balance. (Check all that apply.)
Interest paid by the bank on the bank account balance
A customer's NSF check
Monthly service fees charged by the bank
ATM withdrawals
Checks written by the account owner
Deposits made during the month
Balance per bank statement
Balance per general ledger cash account
Deposit in transit
Note collected by the bank on behalf of the deposit for
Monthly bank charges
Outstanding checks
$600
710
200
80
40
50
$950
$990
$750
Beg bal. $710 +Note $80-bank charges $40.
$630
Determine which of the items below would appear in the Checks and Debits column of a bank statement
and would cause a decline in the account's balance. (Check all that apply.)
Interest paid by the bank on the bank account balance
A customer's NSF check
Monthly service fees charged by the bank
ATM withdrawals
Checks written by the account owner
Deposits made during the month
Gummy Co. purchased merchandise on June 10 at a $9,000 Invoice price with terms of 2/10,n/30 and paid for the merchandise on June 30
Gummy Co. purchased merchandise on June 10 at a $9,000 Invoice price with terms of 2/10,n/30 and
paid for the merchandise on June 30. Illustrate the required entries to record and pay for this purchase
under the gross method and net methods by matching the action on the left with the method on the right
(Assume a perpetual Inventory system Is used.)
Merchandise Inventory would be debited for Gross method
$9,000 on June 10.
Discounts Lost would be debited for $180 on Net method
June 30.
Cash would be credited for $9,000 on June 30 Both methods
Given the bank reconciliation below, show what the effect on the Cash balance in the general ledger will
be ""selecting all of the correct answers below.
'XYZ Co.
Bank Reconciliation
August 30, 2012
Bank balance $2,005 Book Balance $2,25(
Add: Deposit in transit 300 Add: Interest ea med 50
Less: Outstanding checks .:LB5 Less: NSF check 1BQ
Adjusted bank balance $2,12C Adjusted book balance $2,12C
Cash will have an adjusted balance of $2,120 after posting the required adjustments.
Cash will have an adjusted balance of $1,250 after posting the required adjustments.
Cash will be credited by $185 for the outstanding checks.
Cash will be credited by $180 for the NSF check.
Cash will be debited for the $300 deposit in transit.
Cash will be debited by $50 for the interest earned.
paid for the merchandise on June 30. Illustrate the required entries to record and pay for this purchase
under the gross method and net methods by matching the action on the left with the method on the right
(Assume a perpetual Inventory system Is used.)
Merchandise Inventory would be debited for Gross method
$9,000 on June 10.
Discounts Lost would be debited for $180 on Net method
June 30.
Cash would be credited for $9,000 on June 30 Both methods
Given the bank reconciliation below, show what the effect on the Cash balance in the general ledger will
be ""selecting all of the correct answers below.
'XYZ Co.
Bank Reconciliation
August 30, 2012
Bank balance $2,005 Book Balance $2,25(
Add: Deposit in transit 300 Add: Interest ea med 50
Less: Outstanding checks .:LB5 Less: NSF check 1BQ
Adjusted bank balance $2,12C Adjusted book balance $2,12C
Cash will have an adjusted balance of $2,120 after posting the required adjustments.
Cash will have an adjusted balance of $1,250 after posting the required adjustments.
Cash will be credited by $185 for the outstanding checks.
Cash will be credited by $180 for the NSF check.
Cash will be debited for the $300 deposit in transit.
Cash will be debited by $50 for the interest earned.
Jackson Co. needs to replenish its petty cash fund. Currently, it contains $5 in cash and receipts for supplies of $40 and delivery expenses of $49
XYZ Co. decided to create a petty cash fund. They estimated that $100 would be needed in the fund.
Demonstrate the correct journal entry to create the account by choosing the correct action from those
below.
Petty Cash is debited for $100.
Petty Cash is credited for $100.
Miscellaneous Expense is debited for $100.
Cash Is debited for $100.
Jackson Co. needs to replenish its petty cash fund. Currently, it contains $5 in cash and receipts for
supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate
the journal entry to replenish the account and recognize the cash shortage by choosing the correct
actions from those given below. (Check all that apply.)
Demonstrate the correct journal entry to create the account by choosing the correct action from those
below.
Petty Cash is debited for $100.
Petty Cash is credited for $100.
Miscellaneous Expense is debited for $100.
Cash Is debited for $100.
Jackson Co. needs to replenish its petty cash fund. Currently, it contains $5 in cash and receipts for
supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate
the journal entry to replenish the account and recognize the cash shortage by choosing the correct
actions from those given below. (Check all that apply.)
A cash register tape reflected total sales equaling $100, but the cash In the cash register drawer equaled $105.
The bank reconciliation of XYZ Co. is provided below.
Demonstrate the entries needed to update the cash
account in the general Jedger by selecting the correct
answers belo\v
XYZCo.
Bank Reconciliation
Nov30,2016
Bank statement balance $2.01< Book Balance
Add: Denn.cit in transit 600 Add: Note Receivable collected "" ben
Less: Outstanding 370 Less: Bank service charges
$2.200
100
60
Debit cash $600 and credit Revenues $600.
Debit Bank Service Charge Expense $60 and credit Cash $60.
Debit cash $100 and Credit Note Receivable $100.
Debit Miscellaneous Expense $370 and credit cash $370.
Debit Note Receivable $100 and credit cash $ 100.
A cash register tape reflected total sales equaling $100, but the cash In the cash register drawer equaled
$105. Review the statements below and determine which Is correct regarding this discrepancy. (Check
all that apply.)
The cash Over and Short account will be credited for $5.
The Sales account will be credited for $105.
The cash Over and Short account will be debited for $5.
The Sales account will be credited for $100.
The extra $5 collected will be treated as a miscellaneous revenue.
The cash account will be debited for $105.
Demonstrate the entries needed to update the cash
account in the general Jedger by selecting the correct
answers belo\v
XYZCo.
Bank Reconciliation
Nov30,2016
Bank statement balance $2.01< Book Balance
Add: Denn.cit in transit 600 Add: Note Receivable collected "" ben
Less: Outstanding 370 Less: Bank service charges
$2.200
100
60
Debit cash $600 and credit Revenues $600.
Debit Bank Service Charge Expense $60 and credit Cash $60.
Debit cash $100 and Credit Note Receivable $100.
Debit Miscellaneous Expense $370 and credit cash $370.
Debit Note Receivable $100 and credit cash $ 100.
A cash register tape reflected total sales equaling $100, but the cash In the cash register drawer equaled
$105. Review the statements below and determine which Is correct regarding this discrepancy. (Check
all that apply.)
The cash Over and Short account will be credited for $5.
The Sales account will be credited for $105.
The cash Over and Short account will be debited for $5.
The Sales account will be credited for $100.
The extra $5 collected will be treated as a miscellaneous revenue.
The cash account will be debited for $105.
The ABC Company had the following inventory record for the month of January:
The ABC Company had the following inventory record for the month of
January:
# of Unit
Date Description Items Price Item
1/1 Beginning
inventory 5 $20 Z1–Z5
1/5 Sale 2 Z2, Z5
1/11 Purchase 9 12 Z6—Z14
1/28 Sale 7 Z1, Z3, Z6, Z7, Z8, Z9, Z14
Required:
Assuming a perpetual inventory system is used, determine the cost of
goods sold and the ending inventory
1. FIFO
2. LIFO
3. Weighted average
4. Specific identification
January:
# of Unit
Date Description Items Price Item
1/1 Beginning
inventory 5 $20 Z1–Z5
1/5 Sale 2 Z2, Z5
1/11 Purchase 9 12 Z6—Z14
1/28 Sale 7 Z1, Z3, Z6, Z7, Z8, Z9, Z14
Required:
Assuming a perpetual inventory system is used, determine the cost of
goods sold and the ending inventory
1. FIFO
2. LIFO
3. Weighted average
4. Specific identification
A physical inventory of Liverpool Company taken at December 31 reveals the following.
A physical inventory of Liverpool Company taken at December 31 reveals the following.
Per Unit
Item Units Cost Market
Audio equipment
Receivers 345 $ 90 $ 98
CD players 260 111 100
MP3 players 326 86 95
Speakers 204 52 41
Video equipment
Handheld LCDs 480 150 125
VCRs 291 93 84
Camcorders 212 310 322
Car audio equipment
Satellite radios 185 70 84
CD/MP3 radios 170 97 105
Required:
1. Calculate the lower of cost or market for the inventory applied separately to each item.
2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment
to the Merchandise Inventory account.
Per Unit
Item Units Cost Market
Audio equipment
Receivers 345 $ 90 $ 98
CD players 260 111 100
MP3 players 326 86 95
Speakers 204 52 41
Video equipment
Handheld LCDs 480 150 125
VCRs 291 93 84
Camcorders 212 310 322
Car audio equipment
Satellite radios 185 70 84
CD/MP3 radios 170 97 105
Required:
1. Calculate the lower of cost or market for the inventory applied separately to each item.
2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment
to the Merchandise Inventory account.
Wamerwoods Company uses a perpetual inventory system.It entered into the following purchases and sales transactions for March.
Martinez Company's ending inventory includes tile following items.
Per Unit
Product Units Cost Market
Helmets 24 $50 s 54
Bats 17 78 72
Shoes 38 95 91
Uniforms 42 36 36
Compute the lower of cost or market for ending inventory applied separately to each product
Wamerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date Activities
Mar. 1 Beginning inventory
Mar. 5 Purchase
Mar. 9 Sales
Mar. 18 Purchase
Mar. 25 Purchase
Mar. 29 Sales
Units Acquired at Cost Units Sold at Retail
100 units @ $50 per unit
400 units @ $55 per unit
120 units @ $60 per unit
200 units @ $62 per unit
420 units @ $85 per unit
160 units @ $95 per unit
820 units 580 units
Required.
1. Compute cost of goods available for sale and the number of units available for sale.
2. Compute the number of units in ending inventory.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and
(d) specific identification. For specific identification, the March 9 sale consisted of 80 units from
beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units
from the March 18 purchase and 120 units from the March 25 purchase. (Round your average cost
per unit to 2 decimal places.)
4. Compute gross profit earned by the company for each of the four costing methods. For specific
identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the
March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units
from the March 25 purchase. (Round average cost per unit to 2 decimal places.)
Per Unit
Product Units Cost Market
Helmets 24 $50 s 54
Bats 17 78 72
Shoes 38 95 91
Uniforms 42 36 36
Compute the lower of cost or market for ending inventory applied separately to each product
Wamerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date Activities
Mar. 1 Beginning inventory
Mar. 5 Purchase
Mar. 9 Sales
Mar. 18 Purchase
Mar. 25 Purchase
Mar. 29 Sales
Units Acquired at Cost Units Sold at Retail
100 units @ $50 per unit
400 units @ $55 per unit
120 units @ $60 per unit
200 units @ $62 per unit
420 units @ $85 per unit
160 units @ $95 per unit
820 units 580 units
Required.
1. Compute cost of goods available for sale and the number of units available for sale.
2. Compute the number of units in ending inventory.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and
(d) specific identification. For specific identification, the March 9 sale consisted of 80 units from
beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units
from the March 18 purchase and 120 units from the March 25 purchase. (Round your average cost
per unit to 2 decimal places.)
4. Compute gross profit earned by the company for each of the four costing methods. For specific
identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the
March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units
from the March 25 purchase. (Round average cost per unit to 2 decimal places.)
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