SMG AC 221 Chapter Notes - Chapter 6: Debits And Credits, Accounts Receivable, Financial Statement

90 views2 pages

emeraldgoose991

4 Mar 2017

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Percentage of completion method: method of recognizing revenue on long term contracts as production occurs, rather than waiting until the final product is delivered. The company must also recognize the associated expenses. Completed contract method: method of recognizing revenue on long term contracts that delays recognition of both revenue and related expenses until completion of the contract. Gross sales: the total amount of sales before deducting returns, allowances and discounts. Net sales: the amount of sales after deducting returns, allowances and discounts. Sales returns (purchase returns): merchandise returned by the customer. Sales allowance (purchase allowance): reduction of the original selling price. Trade discounts: reductions to the gross selling price for a particular class of customers. Cash discounts: reductions in the amount owed by customers due to prompt payment. Uncollectible accounts (bad debts): receivables determined to be uncollectible because customers are unable or unwilling to pay their debts. Bad debt expense: the loss that arises from uncollectible accounts.

Related Questions

17) Which financial statement is prepared last?

A) statement of retained earnings

B) income statement

C) balance sheet

D) The financial statements can be prepared in any order

18) Net sales revenue is calculated by

A) subtracting sales discounts and estimated sales returns and allowances from sales revenue

B) subtracting cost of goods sold from sales revenue

C subtracting sales discounts and selling expenses from sales revenue

D) adding sales discounts and sales returns and allowances to sales revenue

19) Which of the following is the correct formula to calculate weighted- average unit cost for merchandise inventory?

A) Weighted- average unit cost = Cost of goods available for sale x Number of units available

B) Weighted-average unit cost = Cost of goods available for sale/Number of units available

C) Weighted- average unit cost = Cost of goods available for sale+ Number of units available

D) Weighted-average unit cost = Cost of goods available for sale- Number of units available

20) Which of the following items must be examined by the controller or treasurer before signing a check?

A) the journal entry

C) the confirmation report

B) the ledger

D) the purchase order

21) At the beginning of 2019, Patriots, Inc. has the following account balances:

Accounts Receivable $45,000 (Debit)

Allowance for Bad Debts $8,000 (Credit)

Bad Debts Expense $0

During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $770,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The amount of bad debt expense for 2019 is.

A) $18,000

B) $18,350

C) $28,350

D) $56,875

champagneraccoon18

Common Stock, Total $0.68

Dividends $132.00

Other Expense $378.00

Trading Securities$395.00

Sales Tax Payable$582.00

Purchase Discounts$826.00

General Expense $982.00

Rent Revenue $1,001.00

Purchase Returns & Allowances$1,200.00

Accounts Payable$1,715.00

Interest Payable (Current)$1,900.00

Estimated Warranty Liability$1,949.00

Deferred Income Tax$1,971.00

Unearned Revenue$2,000.00

Capital Lease Obligation$2,245.00

Allowance for Doubtful Accounts$2,400.00

Prepaid Expenses$2,560.00

Notes Payable - Maturity 2018$2,992.00

Operating Activities - Net CashInflow $3,000.00

Held to Maturity Investments$3,079.00

Accrued Wage & Salary$3,100.00

Other Long Term Assets$3,280.00

Income Taxes Payable$3,550.00

Financing Activities - Net CashOutflow $4,000.00

Inventory $4,200.00

Bond Payable (Maturity 2020)$4,562.00

Sales Returns $4,600.00

Intangibles, Net$4,607.00

Administrative Expense$5,000.00

Investing Activities - Net CashInflow $6,000.00

Selling Expense$8,000.00

Accumulated Depreciation, Total$8,863.00

Research & Development$9,832.00

Accounts Receivable$13,249.00

Total Current Liabilities(12/31/15) $15,230.00

Goodwill, Net$15,599.00

Cost of Goods Sold$25,313.00

Total Liabilities (12/31/15)$26,120.00

Additional Paid-In Capital$29,187.32

Property/Plant/Equipment$32,746.00

Cash & Equivalents (BeginningBal. 1/1/2016) $59,000.00

Total Current Assets (12/31/15)$77,301.00

Gross Sales Revenue$80,000.00

Total Owners Equity (12/31/15)$102,380.00

Total Assets (12/31/15)$128,500.00

Additional Information:

The current portion of TotalCapital Lease Obligation is $2,009.

During 2016, the companyrepurchased common stock for $394.

Deferred Income Tax will reversein 2017.

Inventory balance of $4,200 doesnot include adjustments for returns, allowances anddiscounts.

Sales Allowances were 10% of GrossSales.

Sales Discounts were 3% of GrossSales.

Prepayment for futureservices/goods will be earned in 2017.

The company's reporting period isthe same as a calendar year. Income Tax Rate is 30%

Warranty Liability representsexpected repairs in 2017.

Total Owners' Equity on 12/31/2016is $103,860

1.) Prepare an Income Statement for the year ended 2016

maroonlouse610

True/False

Indicate whether the sentence or statement is true or false. 1 point for each question

____ 1. The completed-contract method was developed to relate recognition of revenue on long-term construction-type contracts to the activities of a firm in fulfilling these contracts.

____ 2. Estimates of architects and engineers of percentage-of-completion are not acceptable under generally accepted accounting principles.

____ 3. The use of the direct write-off method is acceptable under generally accepted accounting principles.

____4. The method of estimating uncollectible accounts expense based on the accounts receivable balance emphasizes the determination of the net realizable value of the receivables.

____5. The "list" sales price less any trade discount is the amount at which the receivable and the corresponding revenue should be recorded.

____6. In a bank reconciliation statement, an outstanding check must be subtracted from the bank statement balance in determining the correct cash balance.

____ 7. Accounting for installment sales using the deferred gross profit approach requires determining a gross profit rate for the sales of each year, and establishing an accounts receivable and a deferred revenue account identified by the year of the sale.

____ 8. The deferred gross profit accounts are reported as liabilities under the installment sale method.

____ 9. The cost recovery method is often used when the circumstances surrounding a sale are too uncertain to use the installment sale method.

____ 10. In a bank reconciliation statement, the amount of a not-sufficient-funds check must be added to the depositor's cash balance in determining the correct cash balance.

pucelocust656

SMG AC 221 Chapter Notes - Chapter 6: Debits And Credits, Accounts Receivable, Financial Statement

Document Summary

Get access

Related Documents

SMG AC 221 Lecture Notes - Lecture 1: Rhett Butler, Net Income, Accounts Receivable

ACCT1021 Chapter Notes - Chapter 6: Financial Statement, Bank Reconciliation, Cash Cash

BU227 Chapter Notes - Chapter 7: Bank Statement, Internal Control, Non-Sufficient Funds

Related Questions