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6) The quick ratio helps to measure a company's liquidity. 7) Which of the following is considered to be a more stringent measure of a company's ability to pay its current liabilities than the current ratio? A) Accounts payable B) Quick ratio C) Liquidity ratio D) Collection period 8) A measure of the ability of an.
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26) Under the allowance method, when an account receivable is written off, the journal entry: A) violates the matching principle. B) will decrease net income. C) will decrease total current assets. D) will have no effect on net accounts receivable. 27) Most companies will use: A) the percent-of-sales method for interim statements and the aging-of-receivables method.
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23) Julie Newmar, the controller for Cat Supplies, Inc. scheduled the following accounts. Cat Supplies is considering purchasing Meow Now Co. and its accounts are shown below: Cat SuppliesMeow Now Cash$12,000$15,000 Short-term investments4,5000 Year end and average current receivables22,00032,000 Year end and average inventory26,00018,000 Prepaids2,0003,000 Accounts Payable17,00028,000 Short-term Notes Payable2,0006,000 Total Credit Sales300,000200,000 Required: 1.Compute the Current Ratio for both companies 2.Compute.
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26) For each of the following independent situations, prepare the appropriate adjusting journal entry on the last day of the fiscal year end (FYE). Use the information provided below for each situation. Principal Interest Rate Time Interest Maturity Value 1 $12,000 10% 120 days $400 $12,400 2 $50,000 8% 9 months $3,000 $53,000 3 $15,000 33.33% 180 days $2,500 $17,500 4 $60,000 18% 1 year $10,800 $70,000 5 $90,000 6% 60 days $900 $90,900 1Note executed on July 01, 2012 and FYE is September 30. (92.
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27) Following is the unclassified balance sheet for Heidi's Hut, Inc. Heidi's Hut, Inc. Balance Sheet March 31, 2012 Assets Cash$600 Accounts Receivable1,800 Inventory3,000 Store Supplies1,900 Prepaid Rent 1,500 Land23,000 Building50,000 Accumulated Depreciation—Building  (7,500)42,500 Store Equipment27,000 Accumulated Depreciation—Store Equipment (15,625)              11,375 Total Assets    $85,675   Liabilities and Stockholders' Equity Liabilities Accounts Payable$6,000 Salaries Payable2,500 Unearned Revenue (to be earned in 2 months) 2,000 Long-term note payable   6,000 Total Current Liabilities$16,500 Stockholders' Equity Common Stock31,655 Retained.
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35) If Martson and Co. make the following journal entries, they are using the ________ inventory system. Accounts Receivable 25,000 Sales Revenue 25,000 Cost of Goods Sold 10,000 Inventory 10,000 A) periodic B) perpetual C) FIFO D) LIFO 36) A company purchased inventory for $800 per unit. The company later sold the inventory for $1,000 per unit. The entries to record the sale.
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48) Given the following data, what would the net income after taxes be if the company uses LIFO? Beginning inventory 400 units at $16 Purchases 1,600 units at $19 Units sold 1,200 units at $45 Operating expenses $10,000 Tax rate 40% A) $6,800 B) $8,960 C) $12,720 D) $13,440 49) The following data was obtained from the records of Bitter Inc., for the current year: 01/01Beginning.
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29) Following are key terms relating to notes receivable, as well as a list of definitions. A.Creditor B.Debtor C.Interest D.Maturity date E.Maturity value F.Principal G.Term ______1.The amount of money borrowed by the debtor ______2.Another term for the lender ______3.The cost of borrowing money stated as an annual percentage rate ______4.The length of time from when the note was signed to when.
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24) TV Company's accountant obtained the following data from the company's records: Accounts payable$  76,500 Average accounts receivable$  47,500 Cash$  43,700 Inventories$110,000 Long-term bonds payable$320,000 Net accounts receivable$  42,300 Net sales$514,700 Short-term investments$  28,000 Required: 1.Compute the company's quick ratio. 2.Compute the company's average daily sales. 3.Compute the company's days' sales in receivables 25) Complete the following chart by filling in the missing.
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55) Journalize the following transactions for The Computer Store. The Computer Store uses the allowance method of accounting for uncollectible receivables. April 5The Computer Store sells $3,200 of computer equipment on account to Jane Doe. June 5Jane Doe pays The Computer Store $2,000 of the amount she owes. July 7After repeated attempts to.
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45) Given the following data, by how much would taxable income change if LIFO is used rather than FIFO? Beginning inventory 3,500 units at $60 Purchases 6,500 units at $70 Units sold 8,100 A) Decrease by $15,000 B) Decrease by $19,000 C) Increase by $15,000 D) Increase by $19,000 46) Given the following data, by how much would taxable income change.
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25) Complete the following chart by filling in the missing items. Use a 360-day year and round all answers to the nearest dollar and to 2 decimal places for percentages. Principal Interest Rate Time Interest Maturity Value 1 $12,000 10% 120 days A B 2 $50,000 8% C D $53,000 3 $15,000 D 180 days $2,500 E 4 F 18% G $10,800 $70,000 5 $90,000 6% H $900 I .
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a.The Allowance for Uncollectible Accounts has a $1,200 credit balance prior to adjustment. Net credit sales during the year are $830,000 and 4% are estimated to be uncollectible. Accounts Receivable has a balance of $110,000 at the beginning of the year. b.The Allowance for Uncollectible Accounts has a $900 credit balance.
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5.6   Learning Objective 5-6 1) Accepting credit cards can increase revenue for a company, but the added revenue comes at a cost. 2) When a company factors its receivables, accounts receivable will be credited. 3) Accounts receivable can be sold to a factor as a means of speeding up cash flows. 4) Cash that.
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53) The Cat Company obtained the following information from its accounting records for the year ended December 31, 2012: Sales during 2012$876,500 Credit Sales are 80% of sales Accounts Receivable$205,000 Allowance for Uncollectible Accounts (before adjustment)$830credit Cat Company uses the percent-of-sales method, at 2.0% of credit sales, to estimate uncollectible accounts for 2012. The president of the.
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36) Under the allowance method, the entry to write off a $2,600 uncollectible account includes a: A) debit to Accounts Receivable for $2,600. B) credit to Uncollectible-Account Expense for $2,600. C) credit to Allowance for Uncollectible Accounts for $2,600. D) debit to Allowance for Uncollectible Accounts for $2,600. 37) A company makes a journal entry.
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11) The lower-of-cost-or-market rule is based on the accounting principle of: A) disclosure. B) materiality. C) conservatism. D) revenue. 12) The lower-of-cost-or-market rule requires a company to report inventories at the lower of: A) historical cost or current sales price. B) historical cost or current replacement cost. C) current replacement cost or sales invoice price. D) FIFO cost or.
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11) All of the following costs would be included in inventory EXCEPT for: A) freight-in. B) advertising. C) taxes paid on the purchase price. D) insurance while in transit. 12) ABC Auto Sales sells new Lexus vehicles. ABC will most likely use the ________ method to cost its ending inventory. A) First-in, first-out B) Last-in, first-out C) Specific-unit-cost D).
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6.3   Learning Objective 6-3 1) Without knowledge of the accounting method a company uses to value its inventory, a banker could make an unwise lending decision. 2) When applying the lower-of-cost-or-market rules to inventory valuation, market value generally refers to the cost at which the company can sell a unit of inventory. 3).
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11) Selling accounts receivable typically: A) decreases assets and increases revenues. B) decreases assets and increases expenses. C) increases assets and increases revenues. D) has no effect on assets and decreases expenses. 12) Terry's Berry Farm accepted a bank-issued credit card in payment of a $1,200 sales transaction. Terry's bank charges 2% to process the.
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21) Which is the correct order for items to appear on the income statement? A) Sales revenue, operating expenses, gross profit, net income B) Sales revenue, gross profit, net income, operating expenses C) Sales revenue, gross profit, cost of goods sold, operating expenses D) Sales revenue, cost of goods sold, gross profit, net income 22).
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53) Tom Golden, the accountant for Beauty Galore, Inc., gathered the following information of the month of October: October01Beginning inventory30 units$100 each 08Purchase25 units$130 each 23Purchase27 units$135 each Sales for the month of October50 units Required: 1.Calculate the cost of goods sold for this product for October, using the FIFO method and a perpetual inventory system. 2.Calculate.
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16) Allowance for uncollectible accounts is classified as: A) a contra-expense account. B) a contra-revenue account. C) a contra-asset account. D) none of the above. 17) Which account shows the amount of accounts receivable that the business does NOT expect to collect? A) Sales Returns and Allowances B) Unearned Accounts Receivable C) Allowance for Uncollectible Accounts D) Uncollectible Accounts.
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6.2   Learning Objective 6-2 1) The choice of an inventory costing method does not impact company's balance sheet. 2) The specific unit cost method is used for inventory items that have common characteristics. 3) The FIFO method assigns the most recent inventory cost to expense. 4) In a period of rising prices, FIFO and.
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41) Company A purchased inventory for $100,000. In addition they had purchase returns of $7,000 and paid freight-in of $8,000.Company A's net purchases would be: A) $ 85,000. B) $ 99,000. C) $101,000. D) $115,000. 42) Alberta Company has net purchases of $75,000, purchase returns of $7,000 and purchase discounts of $4,000. Alberta's gross purchases were: A).
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6.1   Learning Objective 6-1 1) Inventory is an asset and cost of goods sold is an expense. 2) Inventory is presented on the balance sheet at the selling price of the item. 3) Service entities will have both a cost of goods sold and an inventory account. 4) Operating expenses are subtracted from sales.
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61) Debit Company uses the aging of accounts receivable method to estimate uncollectible accounts. The company started the year with accounts receivable of $85,000 and an allowance for uncollectible accounts of $10,000. During the year, the company had credit sales of $300,000 and cash collections on account of $325,000. It.
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26) The comparative financial statements of ABC Inc. for 2011, 2010, and 2009 contain the following selected data. Balance Sheet (in thousands):201120102009 Current assets: Cash $80$75$60 Accounts receivable, net230225250 Inventory280340300 Total current assets590640610 Total current liabilities510525500 Income Statement (in thousands): Net sales$2,400$2,200$1,900 Compute the following ratios for 2011 and 2010 and indicate which ratios improved and which ratios deteriorated: a.Acid-test ratio b.Days'.
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50) The following data was obtained from the records of Bitter Inc., for the current year: 01/01Beginning inventory110 units @ $10 02/15Purchase200 units @ $12 04/22Purchase125 units @ $13 07/19Purchase90 units @ $14 12/31Ending inventory75 units Additional information: Sales are $25,000; operating expenses are $14,500; the tax rate is 40%. REQUIRED:  Prepare the income statement using: •FIFO. •LIFO. •Average cost. 51).
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49) Michelle Industries has the following information available for February 2012: Total sales$3,000,000 Credit sales70% Purchases$1,800,000 Credit purchases40% Beginning inventory$   265,000 Cost of goods sold65% of sales Required: 1.Prepare the journal entries necessary to record the above items. 2.Calculate the ending inventory balance. 50) Journalize the following transactions for ABC, Inc. A) Purchases of inventory on account, $74,500 B) Sales on account,.
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11) ________ may be required on a note receivable as security for the loan. A) Maturity value B) Interest C) Collateral D) Principal 12) One method of establishing proper internal control over the collection of accounts receivable is to: A) set up a petty cash fund. B) make all disbursements by cash. C) establish a bank lock box. D).
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6) There are two basic ways to estimate uncollectibles—the direct write off method and the allowance method. 7) Under the direct write-off method, uncollectible-account expense is recorded in the same accounting period as the sale. 8) The Allowance for Uncollectible Accounts normally has a credit balance. 9) The biggest risk of selling on.
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7) When goods are shipped FOB destination: A) revenue is recognized when the goods leave the shipping dock. B) revenue is recognized after any returns are received by the seller. C) revenue is recognized only after cash payment is received. D) revenue is recognized when the goods are received by the customer. 8) If a.
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46) Bigg and Talle Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $5,000,000, and management estimates 2% will be uncollectible. Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $16,000. The amount of expense reported on the income.
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46) The following transactions occurred for Melissa's Fine Jewelry Store during the year: a.Purchased 10 exquisite necklaces on account at $5,000 apiece b.Sold three of the necklaces on account at $8,000 each c.Melissa paid off the accounts payable d.Melissa collected all of the accounts receivable Required: 1.Journalize these transactions for Melissa's Fine Jewelry Store, which uses.
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5.3   Learning Objective 5-3 1) The two major types of receivables are accounts receivable and trade receivables. 2) Accounts (trade) receivables are amounts to be collected from customers from the sale of goods or services. 3) Accounts receivable have a maturity date. 4) The Accounts Receivable account in the general ledger has a separate.
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41) The following data was extracted from the records of Winsam Company: Sales revenue 450 units @ $35 per unit Beginning inventory 100 units at $16 per unit Purchases 400 units at $20 per unit What is the gross profit using the FIFO method? A) $6,950 B) $7,150 C) $8,600 D) $8,800 42) The following data was collected from the accounting records.
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6.4   Learning Objective 6-4 1) For most firms, the gross profit percentage changes significantly from year to year. 2) The gross profit percentage is net sales divided by gross profit. 3) The inventory turnover ratio should be the same for all types of industries. 4) The gross profit percentage: A) is markup stated as a.
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