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148. Lee Sisters reports income before income taxes of $20,000 during 2014. If beginning inventory was understated by $6,000 and ending inventory was overstated by $2,400, calculate corrected income before income taxes for the year. (Show your work.) 149. Why will an understated beginning inventory produce an overstated income before income taxes for.
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21. The Allowance for Uncollectible Accounts is a contra-asset account.  22. The percentage of net sales method of estimating uncollectible accounts is in violation of the matching principle.  23. The principal of a non-interest-bearing note includes an implied interest cost.  24. A 60-day note dated December 10 is due on February 10.  25. Interest on a six-month, 7 percent,.
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132. Cost of goods sold equals $250,000, and average inventory equals $100,000. Days' inventory on hand equals A. 91.3 days.B. 146.0 days.C. 821.9 days.D. 912.5 days. 133. Powell’s inventory turnover is 4.8. What is Powell’s day’s inventory on hand? A. 6 daysB. 13 daysC. 34 daysD. 76 days 134. If cost of goods sold is understated by $6,000 for this year, what effect will this.
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138. How is the matching rule applied when accounting for merchandise inventory? 139. Why are cost flow assumptions made when accounting for merchandise inventory? 140. Why is the LIFO cost flow assumption an acceptable valuation method for merchandise inventory when it rarely matches the physical movement of the product? 141. Emily Holmes owns and operates a large.
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163. Feltner's Shoe Store had net retail sales of $196,000 during the current year. The following additional information was obtained from the accounting records. At Cost At Retail Beginning inventory $30,000 $  60,000 Net purchases for the period 90,000 190,000 Freight-in 8,000 Estimate the company's ending inventory at cost using the retail method. (Show your work.) 164. Pearson Company uses the retail method to.
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112. Use this inventory information for the month of May to answer the following questions. May 1 Beginning inventory 40 units @ $76 7 Purchase 140 units @ $80 18 Sale 50 units 22 Purchase 20 units @ $88 29 Sale 80 units Assuming that a perpetual inventory system is used, what is ending inventory on a LIFO basis? A. More information is needed.B. $10,240C. $5,440D. $5,760 113. Use this inventory information for the month.
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143. How does the perpetual inventory system differ from the periodic inventory system in the determination of cost of goods sold? 144. Under rising prices, why will the FIFO method produce a higher ending inventory than LIFO? 145. What is a LIFO liquidation, and what is its effect on income before income taxes? 146. In practice, why.
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137. Match each description with the document it is describing. 1. Document describing items in a shipment of goods delivered      check authorization 2. Document issued to permit the treasurer to make a payment      invoice 3. Written request prepared by a department asking the purchasing department to make a purchase      purchase requisition 4. Document sent to a vendor requesting shipment of goods      remittance advice 5. Accompanies.
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102. In a period of rising prices, which of the following inventory methods generally results in the highest gross margin figure? A. Cannot tell without more informationB. LIFOC. FIFOD. Average-cost 103. Which inventory method generally best follows the matching principle? A. Average-costB. LIFOC. Whichever method is used for tax purposesD. FIFO 104. Which inventory method generally results in the most realistic balance sheet valuation? A. FIFOB. Specific identificationC. LIFOD. Average-cost 105. In.
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96. How is the account Allowance for Uncollectible Accounts presented in the financial statements, and what purpose does this presentation serve? 97. Explain the two methods used to estimate uncollectible accounts. 98. Why should a dishonored note receivable be transferred to an individual account receivable for the debtor? 99. What is a contingent liability, and how does.
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111. Assume that part of accounts and other receivables on Trejada’s Toys' balance sheet is $8 million and that Thompson estimates its uncollectible accounts as 1 percent of accounts receivable not yet due, 2 percent of accounts receivable between 1 and 60 days past due, and 10 percent of accounts receivable.
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11. Both the allowance method and the direct charge-off method are acceptable for tax purposes.  12. When using the direct charge-off method, year-end adjustments for uncollectible accounts expense are not made.  13. A promissory note may be issued for an amount to be determined at a future date.  14. The debtor named in a promissory note is.
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122. A company has cost of goods available for sale of $250,000, sales of $305,000, and a gross profit percentage of 30 percent. Using the gross profit method, what is the ending inventory? A. $95,000B. $50,000C. $36,500D. $158,500 123. A retail store has goods available for sale of $2 million at retail and $1,100,000 at cost, and ending.
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133. Why is the separation of duties an important control activity in a good system of internal control? 134. On a balance sheet, what items normally are included in Cash? 135. Why do businesses need to keep some currency on hand? 136. Explain management’s responsibility as it pertains to internal control of a company. .
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165. Use the following figures (stated in millions of dollars) to compute the inventory turnover and the days' inventory on hand within one decimal point: Cost of goods sold $13,168 Beginning inventory 1,830 Ending inventory 2,354 a.       Inventory turnover = ___________________b.       Days' inventory on hand = ___________________ 166. Portocall Sailboats reports income before income taxes of $160,000.
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102. Sam’s Menswear has $11,600 in Accounts Receivable at December 31. Sam's accountant estimates that $600 of the $11,600 will never be collected. Complete the current asset section of the balance sheet below. Current assets: Cash $ 28,000 Short-term investments 8,000 Accounts receivable Inventory 100,000 Total current assets $             . 103. A company has the following listed asset accounts. Determine.
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31. It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income.  32. Under securitization, a company sells individual receivables with recourse at a large discount.  33. The fee for factoring without recourse is normally higher than it would be with recourse.  34. A discounted note represents a contingent.
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79. Internal control is weakened by all of the following except A. collusion.B. separation of duties.C. human error.D. effects of changing conditions. 80. Which of the following is not a goal of a system of internal control over merchandising transactions? A. Keep credit losses as low as possible.B. Prevent the theft of cash and inventory.C. Keep the maximum amount of inventory on.
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119. Use the following information regarding Larson Company to answer the question below.      1. Established a petty cash fund in the amount of $250.        2. Reimbursed the petty cash fund given the following petty cash fund disbursements:           a. Payment for postage, $20.            b. Payment for supplies, $70.       .
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115. In the journal provided, prepare the entries for the following transactions. (Omit explanations.) Dec. 1 Sold merchandise on account to Wilma Phillips for $300. 12 Received payment of $200 from Wilma Phillips. 31 Made adjusting entry for Uncollectible Accounts Expense, using the percentage of net sales method. Net sales for the year totaled $28,000, uncollectible accounts are.
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159. Use the following information to calculate ending inventory on (a) a LIFO basis, (b) a FIFO basis, and (c) an average-cost basis. Assume a perpetual inventory system. Dec. 1 Beginning inventory 70 units @ $28 9 Purchases 30 units @ $32 17 Sales 25 units 22 Purchases 15 units @ $36 27 Sales 40 units 160. Up to the date of a fire that completely destroyed Hummer's inventory,.
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117. In the journal provided, prepare entries for the following (assume a calendar-year accounting period). Omit explanations. Dec. 1 Received a three-month, 15 percent note receivable for $7,840 from a customer as an extension of her past-due account. 31 Made the year-end adjustment for accrued interest. Mar. 1 Received full payment on the note. GENERAL JOURNAL Date Description Post.Ref. Debit Credit 118. Determine the interest on the.
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109. Marta Company has the following bank items: Balance per company books $50,000 Balance per bank statement 50,450 Deposit in transit 800 Outstanding checks 1,200 Interest income 100 Service charge 50 The adjusted book balance should be A. $49,250B. $50,000C. $50,050D. $50,850 110. Cash and equivalents can consist of all of the following except A. deposits in checking accounts.B. IOUs from customers.C. certificates of deposit (CDs).D. U.S. Treasury notes. 111. Which of the following would not be a.
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31. A purchase requisition is prepared after a purchase order.  32. A check authorization would be prepared after a receiving report.  33. In addition to keeping the records of a purchase transaction, the accounting department should prepare and mail checks in payment of invoices.  34. Effective internal control requires a department to purchase supplies on its own.  35. The.
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99. Which of the following sets of documents are in the correct sequence? A. Purchase order, check, receiving reportB. Purchase requisition, purchase order, invoiceC. Purchase requisition, receiving report, purchase orderD. Purchase order, purchase requisition, invoice 100. Which of the following would be added to the balance per books on a bank reconciliation? A. Notes collected by the bankB. Deposits in transitC. Service.
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106. On December 31, Ferndale Enterprises has an $800 debit balance in Allowance for Uncollectible Accounts. If an accounts receivable aging method analysis indicated that an estimated $6,400 of December 31 receivables are uncollectible, for what amount would the adjusting entry for uncollectible accounts be recorded? (Show your work.) 107. On December 31,.
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41. Which of the following accounts is classified as a short-term financial asset? A. Office SuppliesB. Accounts ReceivableC. EquipmentD. Prepaid Insurance 42. The allowance for uncollectible accounts is necessary because A. a liability results when a credit sale is made.B. when recording uncollectible accounts expense, it is not possible to predict specifically which accounts will not be collected.C. management should know how.
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1. Following a lenient credit-granting policy will probably result in fewer defaults by customers.  2. Bad debts are considered as an expense of selling on credit.  3. Notes receivable due within 90 days and cash are examples of short-term financial assets.  4. Loans to company employees should be included with accounts receivable on the balance sheet.  5. Because bad.
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69. A physical inventory is usually taken A. in the middle of the fiscal year.B. at the peak of the busy season.C. at the end of the fiscal year.D. at December 31. 70. A company's merchandise inventory includes all of the following, except A. goods in warehouses.B. goods sold, but not yet delivered.C. goods in transit from suppliers, if title has passed.
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41. Merchandising companies do not need as good a system of internal control as service companies.  42. An effective system of internal control centralizes functions in a single, capable individual.  43. The taking of a physical inventory is an example of periodic independent verification.  44. When an individual uses a debit card to make a purchase, the.
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156. Graczyk Company uses a periodic inventory system. During October, it sold 360 units of Product Z. Its beginning inventory and purchases during the month were as follows: Oct. 1 Beginning inventory 100 units @ $20 5 Purchases 100 units @ $24 10 Purchases 100 units @ $22 15 Purchases 100 units @ $24 20 Purchases 100 units @ $28 25 Purchases 100 units @ $26 157. Atwood Company uses a periodic.
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21. The degree of separation of duties varies with the size of the business.  22. Under an effective system of internal control, errors occur only as a result of fraud or dishonesty.  23. The use of a cash register is an example of a physical control.  24. The receiving department must compare goods received with goods purchased,.
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141. Jasmine Company has established a petty cash fund for small expenditures. Prepare journal entries for the following transactions (omit explanations). April  5 Established a $200 petty cash fund with cash withdrawn from company checking account. 30 The petty cash fund has $10 remaining and is replenished. Expenditures for April were $60 for supplies, $50.
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104. Use the following T account to answer the questions below (assume a calendar-year accounting period). Allowance for Uncollectible Accounts 1/10 600 1/15 600 5/12 880 12/31 7,200 What apparently occurred on:a.       January 10?b.       January 15?c.       May 12?d.       December 31? 105. Using the following transactions for 2014, show how the T account below would appear after all appropriate postings.
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51. Use this information to answer the following question.The general ledger account for Accounts Receivable shows a debit balance of $50,000. Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the year were $500,000. In the past, 2 percent of sales have proved uncollectible, and an aging.
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71. The account Allowance for Uncollectible Accounts is classified as a(n) A. contra account to Uncollectible Accounts Expense.B. expense.C. liability.D. contra account to Accounts Receivable. 72. Under the allowance method, Uncollectible Accounts Expense is recorded A. for an estimated amount.B. several times during the accounting period.C. when an individual account is written off.D. for a known amount. 73. Assume that on October 1, a note.
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101. Match each description with the letter of the term to which it corresponds. 1. Shows how many times, on average, a company turned its receivables into cash during a period      discounting 2. Shows how long it takes to collect accounts receivable      factoring 3. Estimates bad debts as a percentage of net sales      securitization 4. Selling notes receivable to a bank      days’ sales.
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11. Merchandisers usually take a physical inventory when the volume of goods is at its lowest levels.  12. Merchandisers usually end their fiscal year during the peak season.  13. Using bar codes to take a physical inventory is considered poor accounting practice.  14. The periodic inventory system provides no means of identifying losses from spoilage, shoplifting, and.
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153. Given the following information about purchases and sales during the year, compute the cost to be assigned to ending inventory under each of three methods: (a) average-cost, (b) FIFO, and (c) LIFO. (Show your work.)Assuming that a periodic inventory system is used Jan. 1 Beginning inventory 100 items @ $8 = $  800 July 1 Purchases 300 items @.
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161. Prior to a fire that destroyed most of its inventory, Tejada Company had inventory purchases during the period of $40,000 and sales of $125,000. Tejada began the period with $95,000 in inventory. Tejada's typical gross profit percentage is 20 percent. Inventory that cost $5,000 survived the fire. Using the gross.
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51. The use of electronic funds transfers makes check writing unnecessary.  52. In the financial statements, the balance of the Petty Cash account and the balance of the Cash account are shown separately.  53. When a petty cash fund is established, the entry contains a credit to Cash.  54. When the balance of a petty cash fund.
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81. Assume that the $2,000, 90-day, 8 percent note was received on August 31 and that the fiscal year ended on September 30. The adjusting entry that would be made to record the interest receivable is (amounts rounded to nearest dollar): A. Interest Receivable              13      Interest Income             .
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113. Chao Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Chao's accountant prepared the following data about ending receivables: $40,000 was not yet due (1 percent expected not to be collected), $20,000 was 1-60 days past due (4 percent expected not to.
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61. A company performs the aging of accounts receivable calculation and arrives at an estimate for uncollectible accounts of $900. If Allowance for Uncollectible Accounts has a debit balance of $200 prior to the year-end adjustment, for how much should the adjustment be journalized? A. $200B. $700C. $900D. $1,100 62. A company has net sales of $50,000 during.
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89. Which of the following is not an internal control activity for cash? A. The amount of cash on hand should be kept to a minimum.B. Banking facilities should be used as much as possible.C. Employees who have access to cash should be bonded.D. All payments should be made with currency, not checks. 90. When payment is received.
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139. Compute the correct amount for each letter in the following table: Case 1 Case 2 Case 3 Balance per bank statement $     (a) $17,800 $3,980 Deposits in transit 1,200 (b) 250 Outstanding checks 3,000 2,000 150 Balance per books 6,900 18,800 (c) 140. The following information pertains to the bank transactions of Rawlins Company:a.       Cash on the books as of April 30 was $499. Cash as shown on the bank.
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1. In a small business, active involvement by the owner can be a practical substitute for the separation of some duties.  2. An effective system of internal control requires that individuals take periodic vacations.  3. Bonding means insuring a company against loss due to employee theft.  4. Management's regular assessment of its internal controls is part of.
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129. Under a perpetual inventory system, is it necessary to take a physical inventory at the end of the period? Why or why not? 130. An accountant is responsible for the following activities: (1) receiving all cash; (2) maintaining the general ledger; (3) maintaining the accounts receivable subsidiary ledger that includes the individual.
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