ACCT 2101 Lecture Notes - Lecture 6: Direct Labor Cost, Historical Cost, Financial Statement
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17 accounting 1 questions! HELP
9. The following amounts and costs of platters were availablefor sale by Corpus Christy Ceramics during 2016:
Beginning inventory | 10 units at $41 |
First purchase | 15 units at $55 |
Second purchase | 30 units at $70 |
Third purchase | 25 units at $65 |
Corpus Christy Ceramics has 35 platters on hand at the end ofthe year.
What is the dollar amount of inventory at the end of the yearaccording to the weighted-average cost method?
Select one:
A. $4,340
B. $9,920
C. $3,465
D. $6,200
32. Santa Fe Corporation uses the perpetual inventory method. OnMarch 1, it purchased $60,000 of merchandise inventory, terms 2/10,n/30. On March 3, Santa Fe returned goods (not damaged) that cost$6,000. On March 9, Santa Fe paid the supplier.
On March 9, Santa Fe should credit:
Select one:
A. Purchase discounts for $1,200
B. Purchase discounts for $1,080
C. Inventory for $1,080
D. Inventory for $1,200
33. Rocky Company has beginning equity of $600,000, net incomeof $100,000, dividends of $60,000 and investments by owners inexchange for stock of $20,000. Its ending equity is:
Select one:
A. $660,000
B. $480,000
C. $536,000
D. $446,000
35. On September 1, 2016, Chopper, Inc. reported RetainedEarnings of $272,000. During the month of September, Choppergenerated revenues of $40,000, incurred expenses of $24,000,purchased equipment for $10,000 and paid dividends of $12,000.
What is the balance in Retained Earnings on September 30,2016?
Select one:
A. $272,000 debit
B. $276,000 credit
C. $ 16,000 credit
D. $274,000 credit
36. Savannah Company purchases $120,000 of inventory during theperiod and sells $36,000 of it for $60,000. Beginning of the periodinventory was $6,000.
What is the company’s inventory balance to be reported on itsbalance sheet at year end?
Select one:
A. $36,000
B. $90,000
C. $ 4,000
D. $ 6,000
37. Assuming rising prices, which method will give the highestdollar value for cost of goods sold on the income statement?
Select one:
A. FIFO
B. Average Cost
C. LIFO
D. All of these give equal values for cost of goods sold
38. Kali Company began the period with $20,000 in inventory. Thecompany also purchased an additional $20,000 of inventory andreturned $2,000 for a full credit. A physical count of theinventory at year‑end revealed an inventory on hand of $16,000.What was Kali’s cost of goods sold for the period?
Select one:
a. $50,000
b. $22,000
c. $48,000
d. $16,000
39. The periodic inventory system differs from the perpetualinventory system:
Select one:
because the periodic system is not compatible with moderntechnology.
because the periodic system continually updates inventory, whilethe perpetual inventory system only updates inventory at the end ofthe period.
because the perpetual system continually updates inventory,while the periodic inventory system only updates inventory at theend of the period.
because the periodic system is more complex and costly.
40. Which one of the following is included in currentassets?
Select one:
A. Common stock
B. Accounts receivable
C. Taxes payable
D. Automobiles
41. For the balance sheet to be in balance, the following mustexist:
Select one:
Total assets must be less than total liabilities
Total assets must be greater than total liabilities
Total assets must equal total liabilities plus stockholders'equity
Total liabilities must equal total stockholders' equity
43. Using a perpetual inventory system, the buyer’s journalentry to record the freight costs includes a:
Select one:
A. Debit to Purchases
B. Debit to Inventory
C. Debit to Freight In
D. Debit to Cost of Goods Sold
44. Joshua records purchases at invoice price and uses theperpetual inventory system. On July 5, Joshua returned $6,000 ofgoods purchased on account to the seller.
How would Joshua record this transaction?
Select one:
A.
Accounts Payable | 6,000 | ||
Purchases | 6,000 | ||
B.
Accounts Receivable | 6,000 | ||
Inventory | 6,000 | ||
C.
Accounts Payable | 6,000 | ||
Inventory | 6,000 | ||
D.
Cash | 6,000 | ||
Purchases | 6,000 | ||
45. Smith & Sons purchased $5,000 of merchandise from theClaremont Company with terms of 3/10, n/30. How much discount isSmith & Sons entitled to take if it pays within the alloweddiscount period of 10 days?
Select one:
$100
$50
$300
$150
46. The accounting record for Max III Company reported thefollowing selected information:
Operating Expenses | $180,000 |
Sales Returns and Allowances | 52,000 |
Sales Discounts | 24,000 |
Sales Revenue | 700,000 |
Cost of Goods Sold | 268,000 |
Determine Max III Company's gross profit.
Select one:
A. $332,000
B. $280,000
C. $308,000
D. $356,000
48. Using a a perpetual inventory system, the seller’s journalentry to record the payment for merchandise, received from thebuyer, within the discount period includes a:
Select one:
A. Debit to Accounts Receivable
B. Debit to Cost of Goods Sold
C. Credit to Sales Discounts
D. Debit to Sales Discounts
49.Geraldo’s Groceries purchased milk cartons at an invoiceprice of $6,000 and terms of 2/10, n/30. On arrival of the goods,Geraldo’s realized that half of the milk was past the expirationdate, and returned them immediately to the supplier.
If Geraldo’s pays the remaining amount of the invoice within thediscount period, the amount paid should be:
Select one:
A. $2,880
B. $5,880
C. $2,940
D. $6,000
50. Which one of the following is not a current liability?
Select one:
A. Wages payable
B. Accounts payable
C. Wage expense
D. Taxes payable
Chester & Wayne is a regional food distribution company. Mr.Chester, CEO, has asked your assistance in preparing cash-flowinformation for the last three months of this year. Selectedaccounts from an interim balance sheet dated September 30, have thefollowing balances:
Cash: $142,100
Accounts payable $354,155
Marketable securities: 200,000
Other payables 53,200
Accounts receivable: 1,012,500
Inventories: 150,388
Mr. Wayne, CFO, provides you with the following informationbased on experience and management policy. All sales are creditsales and are billed the last day of the month of sale. Customerspaying within 10 days of the billing date may take a 2 percent cashdiscount. Forty percent of the sales is paid within the discountperiod in the month following billing. An additional 25 percentpays in the same month but does not receive the cash discount.Thirty percent is collected in the second month after billing; theremainder is uncollectible. Additional cash of $24,000 is expectedin October from renting unused warehouse space.
Sixty percent of all purchases, selling and administrativeexpenses, and advertising expenses is paid in the month incurred.The remainder is paid in the following month. Ending inventory isset at 25 percent of the next month's budgeted cost of goods sold.The company's gross profit averages 30 percent of sales for themonth. Selling and administrative expenses follow the formula of 5percent of the current month's sales plus $75,000, which includesdepreciation of $5,000. Advertising expenses are budgeted at 3percent of sales.
Actual and budgeted sales information is as follows:
Actual:
August: $750,000 & September: 787,500
Budgeted: October: $826,800, November: 868,200,December: 911,600, January: 930,000
The company will acquire equipment costing $250,000 cash inNovember. Dividends of $45,000 will be paid in December.
The company would like to maintain a minimum cash balance at theend of each month of $120,000. Any excess amounts go first torepayment of short-term borrowings and then to investment inmarketable securities. When cash is needed to reach the minimumbalance, the company policy is to sell marketable securities beforeborrowing.
1.Preparea cash budget for each month of the fourth quarter and for thequarter in total. Prepare supporting schedules as needed. (Roundall budget scheduleamounts to the nearest dollar.)
2.You meet with Mr. Chester and Mr. Wayne to present your findingsand happen to bring along your PC with the budget model software.They are worried aboutyour findings in Part 1. They have obviously been arguing overcertain assumptions you were given.
3.Mr. Wayne thinks that the gross margin may shrink to 27.5 percentbecause of higher purchase prices. He is concerned about whatimpact this will haveon borrowings. Comment.
4.Mr. Chester thinks that "stock outs" occur too frequently and wantsto see the impact of increasing inventory levels to 30 and 40percent of next quarter'ssales on their total investment. Comment on these changes.
5.Mr. Wayne wants to discontinue the cash discount for promptpayment. He thinks that maybe collections of an additional 20percent of sales will be delayedfrom the month of billing to the next month. Mr. Chester says"That's ridiculous! We should increase the discount to 3 percent.Twenty percent more wouldbe collected in the current month to get the higher discount."Comment on the cash-flow impacts.
*******************************INSTRUCTOR GUIDANCE THAT ISTHROWING ME OFF******************************
| I have noticedthat a number of people are getting stuck on the Purchases amountto include in the Accounts Payable/Payments calculation. Here is alittle template to follow for Purchases: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COGS (70% x Sales) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| + Ending Inventory (25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| of nextmonth's COGS) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EQUALS Total Available | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Beginning Inventory | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EQUALS Purchases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Here is a little table thatmight help. I populated October's amounts. Note, the $730,575 isthe amount of collections for Oct that you enter into the templateI provided: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Budgeted collections ofsales: | October | November | December | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash receipts: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From prior month withdiscount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (98% x 40% xprior month sales) $308,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From prior month withoutdiscount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (25% x priormonth sales) 196,875 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From second prior month | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (30% x secondprior month sales) 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Totalcollections $730,575 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discounts given (2% x sales x40%) $6,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In an effort to help get youstarted with the Week 4 Assignment, I drafted a set of steps foryou to follow. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Let's look at October. Thebeginning balance of cash for October that I provided in the Wordtemplate in the amount of $142,100 is the ending balance of cashfor September. That is your starting point. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First, you take that numberand add cash receipts (receivables collections and rent income) toget the Total Cash Available I gave of $896,675. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second, you deduct all thevarious disbursements of cash (i.e. outflows) to arrive at theamount of cash before loans and investments that I provided of$837,225. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finally, you add the cashreceived from any sale of investments and loans taken out, ifnecessary, to arrive at the desired ending cash balance of$120,000.
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