ACCT 210 Midterm, Spring 2003

os ww’ . os AMERIC NUNES CHEE oF Tam wee ene ono named April 16,2003 (D# : Instructor name/section = :__(c i! Lie ARY | ACCT 210 Midterm II Spring 2002-2003 . American University of Beirut - School Of Business Name : NAVD JATALEDOS NE . Az DS e L- Multiple Choice II Problems: Problem 1:Bank Reconciliation 20 15 Problem 2: Accounts Receivable 20 25 Problem 3: Perpetual inventory 20 25 , Problem 4: Periodic inventory 15 25 Problem 5: Lower of cost or market ‘5 10 Total 100 120 Good Luck! SHOW ALL SUPPORTING COMPUTATIONS UNtutiple Choice: ( 20points, 20min) Crrele the correct answer to the following muluple choice questions: 1, Mulloy Co. uses a periadic inventory systein. Anes revealed a debit to the Cost of Goods Sold for $7 $180.00 aud the year-end inventory showed $2( for the vear aniounted to: - $715,000 J $20,000 . $735,000 (a) $155.00 aniination of its closing entries 35,000, Its beginning tiventory J0,000 of merch aly andise en hand. Purchases The aging of the accounts receivable approach to estimating uncollectible accounts dues net: . * a, “Take into consideration the existing balance in the Allowance for Doubtful Accounts, 1 Utilize a percentage of probable uncollectible accounts tor é each age group of accounts receivable. S ‘Gi Stress the relationship between uncollectible accounts expense and net sales-yXr, ., Tend te give ‘Yreliable estimate of uncollectible accounts _/ because of the consideration given to the collectibility of specific accounts receivable. sues d 3. In a perpetual inventory system, purchases of merchandise on account are recorded by: debiting: a. Cost of Goods Sold. S b. Accounts Payable. vc. Purchases. g Inventory. 4. In a periodic inventory system, which of the following accounts may be closed by(debiing : . : Peet. the Cast of Goods Sold? ‘ 1yF vt a. Sales. Inventory (beginning), and gross profit. j I asd pa hey i 2 Unventory (beginnitig) and Purchases, a re oe I i iv) Purchases andtrventory tending), ij \ S 4 Sales, Inventory (beginning), and Cost of Goods Available for Sale. 3. During a period of steadily falling prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? ym) ey A Specific identification. ¥ fr r i; Average cost. vA cof LIEO. AOS FIFO, 6. Short-lerm® creditors are Itkely to view a higher-than-average inventory (ucnover rate as indicating that: / a A company is in financial difficulty. 4) The company is able to self its inventory quickly, c The company probably has an excessive arnount of inventory. d The company has a longer-than-average Operating Sree qf me * 4 Senet ty cmeRICAN OT Wid te LIBRA ry oar _——_— eycle nell oe . During the current year Wirth, Ine. had an uiventory turnover rate of 5.0 tw Land an average inventory of S60 million, IW Wirth, Inc. reported gross profit of $250 million for this sear, sales for the year amoutted to: iD ¥ 4550 unltion. Be 5300 million? ¢ $0,250 millian. d Seme wther amount ¥ Phe accounts receivable turnover rate fer Adams Corporation is 8 “ind for Barber Company is 10. These Statistics indicule Wat: a. Barber collects its accounts receivable within 10 days on average, Adams collects its acuounts receivable in 8 days on average. . Barber writes off us uncollectible a greater percentage of its accounts receivable than docs’ Adams Company. : be Barber cdlllects its accounts receivable fabter than does Ackims Company. v4 Barber makés on average 10 credit sales anhually to each of its customers, while Adams makes % credit sales to cach custonier Use the following data for questions 9 and 10 Vrader Bay had credit sales of $4(0.000 for March, Accounts receivable of &: 3.SQ)) were determined to be worthless and were written off during Match. Accounts receivable total $260,000 at March 31. Management feeis that based on past experience, approximately 25e of net creuit sales will prove to be uncullectible. 9. Refer to the above data. Assuming Trader Bay uses the income statement approach (ait allowance method) to account for uncollectible accounts, uncollectible accounts expense for March ts: a. 34.500. / -) $8.000. Y $3,500. d. $11,500. Refer to the above data. Assuming Trader Bay uses the direct write-off methud of accounting for uncollectible accounts, uncollectible accounts expense for March is: $8,000. $4,500. $3,500. $5,200. | & PProblem I N20poiuts, 15 min) “~ POLIS: 7s The Cash account in the ledger of Seymour Company showed a balance of $6,134 at March 31. The bank statement, however, showed a balance of $5,443 at the same date. The only reconciling items consisted of a $1,210 deposit in transit, a bank service charge of $28, outstanding checks totaling $74§, and an NSF check from N. Webb, one of Seymour's customers for $198. ou Required: 1. prepare a bank reconciliation for Seymour Company as of March 31. 2. Give the journal entry necessary, if any, to adjust Seymour Company's accounting 4 records at March 31 i AF.BD__ 5 Is SOO [hy ) 5 aon : . : 19 BOD Problem 2: ( 20points, 25min) ae - a Freeze [ESOC bmaefrenlel Pent 2 RPO} Abe 2220 J ~ 8720 Hoomer Company uses the balance sheet approach in estimating * - ~ uncollectible account expense. It has completed an aging analysis of accounts receivable at December 31, 2001. This:. analysis disclosed the following information: coe — eee niente Age Perceritage Considered Uncollectible Group Total : ; not yet due $51,000 ; 5% _ LSSO 1 — 30 days past due $29,000 13% 3F7O | 31-60 days past due__| $12,000 20% 19 yoO : hes ° The beginning balance of the Allowance for Doubtful'Accounts was $15,500 7 ree credit on Jan 1, 2001- i. AFRO \asee “ge * Accounts written off on June 5, 2001 amounted to $2,000” AJR 12Ese ¢ $3,000 of accounts previously written off were collected on Sept 16,2001 ue 3o8 © soe * The balance of Accounts receivable at Dec 31, 2001 was $92,000 Cpe 320 - ; ae oO BYR Required: a _ Prepare the journal entry to record the accounts written off on June 5 2001! 2. Prepare the required journal entries to record the collection of the previously written off accounts on Sept 16, 2001 3. Determine the amount of Allowance for doubtful accounts at Dec 31 2001, using the age analysis 4. Prepare the necessary adjusting entry at Dec 31, 2001 to account for the doubtful accounts using the age analysis ‘ 5. Determine the Net Realizable Value of the account receivable at Dec 31, 2001 NAY ~ 9 206? - BDDe ‘$3290 ji Problem 3: ( 20points, 25min) PEcohe | FQ) Sonic Slereo uses alpe nventory system, and the UR yaluation method. Shown below are Sonic’s beginning inventory of a particular product and purchases during January: _, Unit Cost Total Cost Bexginaing mventory Gan. 1) ~ AD 48 $180 $1,800 Sl Gan. 6)... _ 210 4,200 a urchase (Jan. 25).. 215 4,300 210,300 On January 23 (prior to the purchase on January 25), Sonic sold 25 units of this product at a price of $ 300/unit cash. : Required: i Tay. all Cae Prepare the journal entries of Jan 6, Jan 23 and Jan 25.( assume they paid cash for Xero) their purchases) : 4 FOO Post to an Inventory subsidiary ledger.~~? 7 A physical count on Jan 31, showed that there are only 2B units left on hand. Prepate-—"~ the necessary adjusting entry. ( assume that it is immaterial)& post ittothe ccwes Bea subsidiary ledger. Tia 36 Determine the Cost of Goods Sold for January and the dollar amount of Inventory ¥F3q that would appear in Sonic Stereo’s Balance Sheet as of Jan 31. Problem 4: (L5points, 25min) Fashion World uses a periodic inventory system. The begitining inventory of a particular product, and the purchases during the current year, were as follows: L Jan. 1 Beginning inventory 400 units @ $9.00 = $ 3,600 ‘Feb. 15 Purchase .. 1,000 units @ $9.50 9,500 June 30 Purchase 1,400 units @ $10.00 14,000 Nov. 25 Purchase 1,200 units @ $10.25 12,300 Total available for sale in year. : $39,400 At December 31, the ending inventory of this product consisted off 1,500 URIS e505 Ageo Required: Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following pene’ of inventory valuation: 1. Average cost» 39429? + as ha — COES a AS AGS AUS 2S- 2. FIFO GO Oe Crd Lv 2 1900 Kn 3.9 F = (9299 3. Li Oo r > AI Crd LaV = (100% 10.95) +B00rtI= IS F00 COE5 + $9409- 15306 24, Lao Cod Ja V 5 (oo » 9)+ Gooks) AB BHO) klar) = Nyro COC5 = 39 400- jy10 = 25,309