ACC – 510

1.       During the month of March, Cooley Computer Services made purchases on account totaling $47,500. Also during the month of March, Cooley was paid $12,000 by a customer for services to be provided in the future and paid $38,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $81,300, what is the balance in accounts payable at the end of March?

2.       Hal Smith opened Smith’s Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company’s books:

·         Smith invested $25,500 cash in the business.

·         Smith contributed $101,000 of equipment to the business.

·         The company paid $2,100 cash to rent office space for the month.

·         The company received $16,500 cash for repair services provided during March.

·         The company paid $6,300 for salaries for the month.

·         The company provided $3,100 of services to customers on account.

·         The company paid cash of $510 for monthly utilities.

·         The company received $3,200 cash in advance of providing repair services to a customer.

·         Smith withdrew $5,100 for his personal use from the company.

Based on this information, net income for March would be:

$10,690. $13,890. $5,590. $8,790. $13,990.

3.       A $140 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Office Equipment, overstated $140; Fees Earned, understated $140.

Office Equipment, overstated $140; Fees Earned, overstated $140.

Office Equipment, overstated $280; Fees Earned, understated $140.

Office Equipment, understated $140; Fees Earned, overstated $140.

Office Equipment, understated $280; Fees Earned, overstated $140

4.       On March 31, Phoenix, Inc. paid Melanie Publishing Company $20,520 for a 3-year subscription for five different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Melanie Publishing Company for each year of the subscription assuming Melanie uses a calendar reporting period?

$20,520; $0; $0; $0.

$6,840; $6,840; $5,160.

$5,130; $6,840; $6,840; $1,710.

$0; $0; $0; $20,520.

The answer cannot be determined based on the information given.

5.       Alex Company has 10 employees, who earn a total of $2,100 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

Debit Salaries Expense, $6,300; credit Salaries Payable, $6,300.

Debit Salaries Expense, $4,200; credit Salaries Payable, $4,200.

Debit Salaries Expense, $10,500; credit Salaries Payable, $10,500.

Debit Salaries Payable, $6,300; credit Salaries Expense, $6,300.

Debit Salaries Expense, $6,300; credit Cash, $6,300.

6.       On December 1, Miller Company borrowed $900,000, at 8% annual interest, from the Nomo Bank. Miller has 90 days before the first payment is required. What is the adjusting entry that Miller would need to make on December 31, the calendar year-end? (Use 360 days in a year.)

Debit Interest Payable, $6,000; credit Interest Expense, $6,000.

Debit Interest Expense, $6,000; credit Interest Payable, $6,000.

Debit Interest Expense, $6,000; credit Cash, $6,000.

Debit Interest Expense, $18,000; credit Interest Payable, $18,000.

Debit Interest Expense, $72,000; credit Interest Payable, $72,000.

7.       A $45 credit to Sales was posted as a $180 credit. By what amount is Sales in error?

$180 understated.

$180 overstated.

$45 understated.

$135 overstated.

$135 understated.

9.       On March 31, Phoenix, Inc. paid Melanie Publishing Company $21,240 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year assuming Phoenix using a calendar reporting period?

$21,240; $15,930; $8,850; $1,770.

$5,310; $7,080; $7,080; $1,770.

$7,080; $7,080; $7,080.

$15,930; $8,850; $1,770; $0.

The answer cannot be determined based on the information given.

10.   The following transactions occurred during July:

·         Received $940 cash for services provided to a customer during July.

·          Received $2,600 cash investment from Barbara Hanson, the owner of the business.

·          Received $790 from a customer in partial payment of his account receivable which arose from sales in June.

·          Provided services to a customer on credit, $395.

·          Borrowed $6,400 from the bank by signing a promissory note.

·          Received $1,290 cash from a customer for services to be rendered next year.

What was the amount of revenue for July?

$12,020.

$1,335.

$3,415.

$2,625.

$940.

11.   A company normally sells its product for $25 per unit. However, the selling price has fallen to $20 per unit. This company’s current inventory consists of 250 units purchased at $21 per unit. Replacement cost has now fallen to $18 per unit. Calculate the value of this company’s inventory at the lower of cost or market.

$4,600.

$5,250.

$5,000.

$4,450.

$4,500.

12.   A company purchases merchandise with a catalog price of $36,000. The company receives a 31% trade discount from the seller. The seller also offers credit terms of 1/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise? (Round your answer to the nearest dollar amount.)

rev: 03_28_2012

$25,560.

$35,640.

$11,048.

$24,840.

$24,592

13.   Brig Company had $850,000 in sales, sales discounts of $13,000, sales returns and allowances of $19,000, cost of goods sold of $420,000, and $280,000 in operating expenses. Gross profit equals:

$818,000.

$118,000.

$398,000.

$411,000.

$417,000.

14.   Use the information in the adjusted trial balance presented below to calculate current assets for Jones Company:

Account Title Dr. Cr.

Cash 24,400

Accounts receivable 17,400

Prepaid insurance 8,000

Equipment 114,000

Accumulated Depreciation – Equipment 57,000

Land 109,000

Accounts payable 18,400

Interest payable 3,100

Unearned revenue 6,400

Long-term notes payable 26,000

J. Jones, Capital 161,900

Totals 272,800 272,800

15.   Gotham Company reported a December 31 ending inventory balance of $412,500. The following additional information is also available:

·         The ending inventory balance of $412,500 included $73,300 of consigned inventory for which Gotham was the consignor.

·         The ending inventory balance of $412,500 included $24,600 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year.

·         The ending inventory balance of $412,500 did not include goods costing $49,300 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year.

·         The ending inventory balance of $412,500 included damaged goods at their original cost of $40,600. The net realizable value of the damaged goods was $11,300.

·         The ending inventory balance of $412,500 included $44,300 of consigned inventory for which Gotham was the consignee.

Based on this information, the correct balance for ending inventory on December 31 is:

$241,000

$303,000

$314,300

$338,900

$358,600

16.   Jackson Company has sales of $317,000 and cost of goods available for sale of $271,700. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:

$49,800

$176,600

$45,300

$95,100

Impossible to determine from the information provided.

17.   Pettis needs to determine its year-end inventory. The warehouse contains 25,000 units, of which 3,500 were damaged by flood and cannot be sold. Another 2,500 units were purchased and shipped FOB shipping point and are in transit. The company also consigns goods and has 4,500 units at a consignee’s location. How many units should Pettis include in its year-end inventory?

rev: 06_30_2012

35,500

32,000

26,000

23,500

28,500

18.   A company purchased $4,400 worth of merchandise. Transportation costs were an additional $400. The company later returned $325 worth of merchandise and paid the invoice within the 1% cash discount period. The total amount paid for this merchandise is:

$4,431.00.

$4,475.00.

$4434.25.

$4,075.00.

$4,356.00.