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25. If you are using the Allowance method, when an account becomes uncoliectible and must be witten otf, a. Allowance for Doubtful Accounts should be credited. b. Accounts Receivable should be crecited c. Bat Debis Expense should be debited. d. Sules revenues should be debited 26. If the Jackson Company had a beginning balance in the allowance for doubtul accounts of $1,000 credit, and wrote off $3,000 in accounts during the year and prepared an adjusting journal entry to the allowance account for $10,000, what is the ending balance in the Allowance for Doubthi Accocints? a. $14000 cretit balance b. $12,000 credit balance. c. $10,000 credit balance d. $8,000 credit balance 27. A company purchased factory equipment on April 1, 1999 for $48,000. It is estimated that the equipment will have a $6,000 salvage value at the end of its 10 -year useful life. Using the straight-ine method of depreciation, the amount to be recorded as depreciation expense at December 31, 1999 is: a. $4,800. b. $4,200 c. $3,150 d. $3,600. 28. The journal entry to record a purchase allowance (original purchase was on account) under a perpetual inventory system is a. Dr. Accounts Payable; Cr. Merchandise inventory b. Dr. Purchase Retums and Allowances; Cr. Accounts Payable c. Dr. Accounts Payable; Cr. Purchase Returns and Allowances d. Dr. Merchandise Irventory; Cr. Accounts Payable. 29. If the allowance method is used and the Net Accounts receivabie is $364,000, what is the Net account recelvable after writing off $12,000 in bad accounts? a. $376,000 b. $352,000 c. $364,000 d. can't determine with information provided 30. On the balance sheet the Allowance for Doubtful Accounts a. is offset against total current assets. b. increases the cash realizable value of accounts receivable. c. appears under the heading "Other Assets." d. is deducted from accounts recelvables. 31. A company purchased factory equipment for $100,000. It is estimated that the equipment will have a $10,000 salvage value at the end of its estimated 5-year useful life. If the company uses the straight line method of depreciation, the amount of annual depreciation for the second year atter the purchise is? a. $40,000. b. $18,000. c. $20,000. d. $36,000. 20. During 1999, Rirter Corporation reported net sales of $2,000,000, and net income of $1,200,000. Ritter atso reported beginning totat assets of $1,000,000 and ending total pssets of $51,500,000. What is the isset turnover ratio for 1999 ? a. 2 times b. 1.6 times c. 1.3 times d. 96 times 21. Hunter Company purchased merchandise inventory under the perpetual method on October 2, 2009 with an invoice price of $4,000 and credit terms of 2/10,n/30. What is the journal entry to record the payment on October 9, 2009? a. Dr. Cash $4,000; Cr. Accounts Payable $4,000 b. Dr. Accounts Payable $4,000; Cr, Cash $3.920, Cr. Merchandise inventory $80 c. Dr. Accounts Payable $4,000; Cr. Cash $3,920, Cr. Purchase Discounts $80 d. Dr. Cash $3,920 and Dr. Purchases $80;Cr. Accounts Payable 22. Johnson Company uses the percent of receivables method for recording bad debts expense. The accounts receivable baiance is $75,000, Management estimates that 5% of accounts receivable are uncollectible. What is the cash (net) realizable value of the accounts receivable after the adjusting entry is made? a. $75.000. b. $71,250. c. $78,750. d. $70,000. 23. A truck costing $35,000 was completely destroyed when its engine caught fire: At the date of the fire, the accumulated depreciation on the truck was $16,000. An insurance check for $15,000 was teceived based on the value of the truck at the time of loss. (NOTE treat like cash sale) The journal entry to record the insurance proceeds and the disposition of the truck (truck taken to dump) includes a a. Gain on Disposal of $15,000. b. Credit to the Truck account of $19,000 c. Credit to the Accumulated Depreciation account for $16,000. d. Loss on Disposal of $4,000. 24. In a period of rising prices, which of the following statements is true? a. LIFO will have the higher ending inventory and highest cost of goods sold as compared to FIFO. b. FiFO will have the higher ending imventory and highest cost of good sold as compared to LIFO. c. FIFO will have the higher ending inventory and lowest cost of goods sold as compared to LIFO. d. LIFO will have the higher ending inventory and lowest cost of goods sold as compared to FIFO 14. Weber Company uses the penodic method to account for it merchandise inventory and has the followng account balances The Cost of Goods Sold for the period is a. $124,000. b. $135,000. c. $120,000. d. $125,000. 15. If a company fails to record bad debts expense for the period, a. cash realizable value is understated. b. expenses are understated: c. revenues are understated. d. net receivables are understated. 16. A company has equipment on its balance sheet with a cost of $25,000. The equipment has a four year useful life and zero estimated salvage value. At the beginning of the year, the related accumulated depreciation account had a balance of $9,375 if annual depreciation is $6.250, the book value of the equipment at the end of the year is a. $25,000 b. $15,625 c. $9,375 d. $6,250 17. Data for Camara Co, for the year-ended December 31,2009 are as follows: Sales revenue Cost of goods sold Beginning inventory Ending inventory Camara's days in inventory for 2009 is a. 36.5 b. 42.4 c. 52.1 d. 62.9 18. Roman \& Co. at December 31,1999 had beginning accounts recelvable of $40,000; ending accounts receivables of $60,000; cost of goods sold of $600,000; and net sales of $800,000. What is Roman's Accounts Receivable turnover for 1999 ? a. 20.0 times b. 16.0 times c. 13.3 times d. 12,0 times 1. Jones, Company purchased $1,500 of merchandise, termis of 2/10,n/30, Jones Company retums $300 of the merchandise that was damaged. Whar is the joumal entry for the payment if Jones pays within the discount period and they are using the perpetual method? a. Or. Accounts Payable $1,470; Cr, Cast $1,470. b. Dr. Cash $1,476, Cr. Merchandise inventory $1,476 c. Dr. Accounts Payable $1,200;Cr. Cash $1,176,Cr, Merchendise imventory $24 d. Dr. Account5 Payable \$1,200; Cr. Cash \$1:276, Cr. Purchase Discount $24 Use the following information for questions 2 and 3 A company just starting business made the following four inventory acpuistions in June: A physical count of merchandise inventory on June 30 reveals that there are 250 urits on hand. 2. Using the First in. First Out inventory method, the value of the Cost of Goods Suld on June 30 is a. $1,365. b. $1,620. c. $2,580 : d. $2,835. 3. Using the Last-In, First-Out method, the amount allocated to the Ending Invertory on June 30 is a. $1,365. b. $1,620. c. 52,580 d. $2,835. 4. Jones Company lends Gray Company $20,000 on May 1, accepting a fout-month, 996 interest note. Jones prepares financial statements on May 31 . What adjusting entry should be made before the financial statements can be prepared? a: Dr. Note Recetvable, $20,000, Cr. Cast, $20,000 b. Dr. Interest Recelvable, $150, Cr, Interest Revenue, $150 c. Dr. Cash, 150, Cr. Interest Revenue, $150 d. Dr. Interest Receivable, $600; Cr. Interest Revenue, $600 5. Which of the following does not affect the merchand se inventory account assuming the perpetual inventory system is used: a. Freight-in. b. Freight-out. c. Acquisition of merchandise imventory. d. Return of merchandise inventory. 6. On July 1, 2000, Waters Kennels sells equipment for $18,000, The equipment ociginaly cost$60,000. had an estimated 5.year life and an expected salvage value of $10,000. The Accumulated Depreciation account had a balance of $35,000 on January 1,2000 , using the straight-line method, At disposal, there is a a. $3,000 gain. b. $2,000 loss. c. $3,000 lass. d. $2,000 gain. Use the following trial balance to answer the next questions: Henderson Hardware Adjusted Trial Balance 1. What is the gross profit? 2. What is the income from operations? 3. What is the income before taxes? 4. What is net income? 5. What is the amount of total current assets? 6. What is the amount of total assets? 7. What is the amount of current liabilities? 8. What is the amount of total llabilities? 9. What is the amount of retained earnings at 12/31? 10. What is the amount of stockholder's equity at 12/31 ? 7. When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when a. a sale is made. b. an account becomes bad and is written off. c. management estimates uncollectible accounts at the end of the accounting period. d. a customer's account becomes past due. 8. The balance in the Accumulated Depreciation account represents the a. cash fund available to replace plant assets. b. amount to be deducted from the cost of the plant asset to arrive at its fair market value. c. total amount charged to depreciation expense in the current period. d. total amount charged to depreciation expense since the plant asset was acquired. 9. The journal entry to record a return of merchandise that was purchased on account under a perpetual inventory system is a. Dr. Accounts Payable, Cr. Merchandise Inventory b. Dr. Purchase Returns and Allowances; Cr. Accounts Payable c. Dr. Accounts Payable; Cr. Purchase Returns and Allowances d. Dr. Merchandise inventory; Cr. Accounts Payable 10. Assuming Sampson Company has sales of $600,000, Sales Returns and Allowances of $60,000, Sales Discounts of $40,000 and cost of goods sold of $350,000, the gross profit rate is a. 70% b. 30% c. 15% d. 25% 11. Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry should Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? a. Bad Debts Expense Allowance for Doubtful Accounts.... b. Bad Debts Expense Allowance for Doubtful Accounts.... c. Bad Debis Expense Accounts Receivable d. Bad Debts Expense 10,000 10,000 Accounts Receivable 8,000 8,000 8,000 8.000 10,000 10,000 12. Under a perpetual inventory system, the journat entry to record the purchase of merchandise for resale is a. Dr. Merchandise Inventory; Cr. Accounts Payable. b. Dr. Purchases; Cr. Accounts Payable c. Dr. Accounts Payable; Cr. Purchases d. Dr. Accounts Payable; Cr. Merchandise inventory 13. Equipment was purchased for $15,000. Freight charges amounted to $700 and there was a cost of $2,000 for building a platform and installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5 -year useful life. Depreciation expense each year using the straight-line method will be a. $3,540. b. $2,940. c. $2,460. d. $2,400

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