Nombre:______________________________ Asignación#5 Contabilidad Intermedia 201

Nombre:______________________________ Asignación#5 Contabilidad Intermedia 201 Fecha:_____________ Chapter 7—Cash and Receivables MULTIPLE CHOICE 1. Which of the following would be included in cash and cash equivalents on the balance sheet? a. certificates of deposit b. bank overdrafts c. commercial paper d. postage stamps 2. Which of the following would not be considered as a cash equivalent? a. certificates of deposit b. commercial paper c. treasury bills d. money market fund securities 3. Items classified as “cash” on the balance sheet a. are limited to coins, currency, or bank drafts b. must be available to pay current obligations c. may be subject to contractual restrictions d. do not include negotiable checks or bank drafts 4. Which of the following would not be reported on the financial statements? a. sales discount taken b. trade receivables c. trade discounts d. sales discounts not taken 5. When a company decides to sell its goods on credit, it should evaluate the effect on profit of Additional Revenues a. b. c. d. Yes Yes No No Additional Expenses Yes No Yes No Asignación #5 (ACCO 201 Prof. Carlos Álvarez) 5-1 6. In accounting for sales discounts, most companies use the a. allowance method b. gross price method c. discounted price method d. net price method 7. The Sales Returns and Allowances account is reported as a a. contra-revenue account on the income statement b. current liability on the balance sheet c. deduction from accounts receivable on the balance sheet d. selling expense on the income statement 8. In order to be classified as a cash equivalent, an investment must have a maturity date of a. less than six months b. three to six months c. six to twelve months d. three months or less 9. Which of the following methods may not be appropriate for estimating bad debt expense? a. percentage of net credit sales b. percentage of outstanding accounts receivable c. aging of accounts receivable d. percentage of sales 10. Bad debt expense is normally reported on the income statement as a(n) a. operating expense b. offset against gross sales c. financial expense in the other items section d. contra-revenue amount 5-2 11. The estimate of bad debt expense may be based on the historical relationships between actual bad debts incurred and Sales a. b. c. d. Yes Yes No No Accounts Receivable No Yes Yes No 12. During 2014, a company wrote off $6,000 in uncollectible accounts receivable. At the end of the year, they estimated bad debt expense using a percent of gross sales. In 2015, the company recovered a $1,000 account that was written off in 2014. The recording of this recovery would include a a. debit to retained earnings b. credit to accounts receivable c. debit to allowance for doubtful accounts d. credit to prior period adjustments 13. If a company usually sells its accounts receivable, it records any factoring commissions as a(n) a. Loss b. Expense c. Receivable d. Liability 14. Melody, Inc., accepts a national credit card. The collection fee is 6%. If credit card sales are $500, the correct journal entry is 470 a. Accounts Receivable Sales Accounts Receivable b. Credit Card Expense Sales c. Accounts Receivable Sales d. Accounts Receivable Credit Card Discount Sales 470 470 30 500 500 500 500 30 470 Asignación #5 (ACCO 201 Prof. Carlos Álvarez) 5-3 15. What entry format is appropriate if sales returns and allowances occur on factored accounts? XX a. Sales Returns and Allowances Receivable from Factor b. Receivable from Factor Factoring Expense Sales Returns and Allowances c. Factoring Expense d. Receivable from Factor Accounts Receivable XX XX XX XX XX XX XX 16. Short-term non-interest-bearing notes receivable are usually recorded at their a. present value b. net realizable value c. principal value d. maturity value BONO’s 17. On June 3, Trade Bank loaned a customer $30,000 on a 60-day, 10% note, remitting the face value less the interest to the customer. Which of the following journal entries would Trade Bank use to record the receipt of the note? 30,000 a. Notes Receivable Interest Revenue Cash b. Notes Receivable Cash Notes Receivable c. Cash d. Notes Receivable Interest Revenue Cash 3,000 27,000 30,000 30,000 29,500 29,500 30,000 500 29,500 18. Mesa Tables Co. uses a four-column bank reconciliation. The bank statement reports May payments of $1,315, including service charges of $20. At the beginning of May, there were $90 of checks outstanding. At the end of May, there were $120 of checks outstanding. Before recording the bank service charges, Mesa Tables must have recorded May payments of a. $1,325. b. $1,265. c. $1,305. d. $1,365. 5-4 19. Marlon, Inc., reported a balance of $143 in its cash account at the end of the month. There were $120 of deposits in transit and $115 of checks outstanding. The bank statement showed a balance of $150, service charges of $6, and the collection of a note plus interest. The note had a face value of $15. How much interest did the bank collect for the company? a. $18 b. $ 3 c. $24 d. $12 PROBLEM 1. The accounting records for Ortiz, Inc. revealed the following information on April 30, 2015: Bank statement balance, April 30, 2015 Credit memo with bank statement for interest earned during April on bank account Debit memo with bank statement for April’s service charge Deposits in transit on April 30 Cash on hand NSF customer check on April 30 A $175 deposit made on April 3 was recorded incorrectly by the bank as The bank collected a customer’s note receivable (including 10% interest) Outstanding checks on April 30 Cash account balance, April 30, 2015 $51,000 15 27 2,000 500 1,000 125 1,100 3,900 50,000 Required: a. b. Prepare a bank reconciliation using good format. Prepare any necessary adjusting journal entries for April 30, 2015. Asignación #5 (ACCO 201 Prof. Carlos Álvarez) 5-5

nstructions Choose a decision-making scenario from the online resources—make-b

nstructions Choose a decision-making scenario from the online resources—make-buy (outsource), keep or drop, special order, constrained resources. Present a short synopsis of the scenario with key supporting data in an Excel spreadsheet. Present a relevant cost analysis for your selected scenario. Make a decision based on both your relevant quantitative analysis and on other important qualitative factors for this scenario. Support your decision with reference to specific information presented in your Excel spreadsheet

Ocean Atlantic Co. is a merchandising business. The account balances for Ocean A

Ocean Atlantic Co. is a merchandising business. The account balances for Ocean Atlantic Co. as of July 1, 2012 (unless otherwise indicated), are as follows:   ——— AND SO ON—————-   During July, the last month of the fiscal year, the following transactions were completed: July 1. Paid rent for July, $4,000. 3. Purchased merchandise on account from Lingard Co., terms 2/10, n/30, FOB shipping point, $25,000. 4. Paid freight on purchase of July 3, $1,000. 6. Sold merchandise on account to Holt Co., terms 2/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $24,000. 7. Received $18,000 cash from FlattCo.on account, no discount. 10. Sold merchandise for cash, $90,000. The cost of the merchandise sold was $50,000. 13. Paid for merchandise purchased on July 3, less discount. 14. Received merchandise returned on sale of July 6, $7,000. The cost of the merchandise returned was $4,500. 15. Paid advertising expense for last half of July, $9,000. 16. Received cash from sale of July 6, less return of July 14 and discount. 19. Purchased merchandise for cash, $22,000. 19. Paid $23,100 to Carino Co. on account, no discount. Record the following transactions on Page 21 of the journal. 20. Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $25,000. 21. For the convenience of the customer, paid freight on sale of July 20, $1,100. 21. Received $17,600 cash from Owen Co. on account, no discount. 21. Purchased merchandise on account from Munson Co., terms 1/10, n/30, FOB destination, $32,000.July 24. Returned $5,000 of damaged merchandise purchased on July 21, receiving credit from the seller. 26. Refunded cash on sales made for cash, $12,000. The cost of the merchandise returned was $7,200. 28. Paid sales salaries of $22,800 and office salaries of $15,200. 29. Purchased store supplies for cash, $2,400. 30. Sold merchandise on account to Dix Co., terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250. 31. Received cash from sale of July 20, less discount, plus freight paid on July 21. 31. Paid for purchase of July 21, less return of July 24 and discount. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (??) in the Posting Reference column. Journalize the transactions for July starting on page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). a) Merchandise inventory on July 31 $ 565,000 b) Insurance expired during the year $ 13,400 c) Store supplies on hand on July 31 $3,900 d) Depreciation for the current year $11,500 e) Accrued salaries on July 31: Salesalaries $3,200 Office salaries $1,300 $4,500 5. Optional: Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on page 22 of the journal. 7. Prepare an adjusted trial balance 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account. 10. Prepare a post-closing trial balance.

Oliver Inc. produces an oak rocking chair that is designed to ease back problems

Oliver Inc. produces an oak rocking chair that is designed to ease back problems. The chairs sell for $300 each. The results of last year’s operations are as follows: Units in beginning inventory. 0 Units produced during the year. 25,000 Units sold during the year. 20,000 Units left in ending inventory. 5,000 Variable manufacturing costs per unit. Direct materials $70 Direct labor 20 Variable manufacturing overhead 15 Variable selling and administrative 10 Total variable cost per unit $115 Fixed costs: Fixed manufacturing overhead $600,000 Fixed selling and administration 650,000 Total fixed costs $1,250,000 Required: A.) Determine the unit product cost under absorption costing, variable costing, and throughput costing. B.) Prepare an income statement using variable costing. C.) Prepare an income statement using absorption costing. D.) Explain the difference in operating income for the two costing systems.

On 1-1-01, the City of Midville received $100,000 from a citizen, who specifie

On 1-1-01, the City of Midville received $100,000 from a citizen, who specifies the principal amount should remain intact. Earnings on the principal are to be used for park beautification projects and upkeep. Required: Record the following events in the appropriate Permanent Fund and Special Revenue Fund, as necessary. a. The deposit is made of the cash received. b. The cash is invested in marketable securities. c. Total interest accrued on investments for the year is $8,000; A liability is established in the permanent fund for what is owed to special revenue fund. d. The interest is collected and transferred to the appropriate special revenue fund. e. Park Operating expenses are $2,500; $5,500 is spent on new park benches. Required: Using this information, make the necessary entries in all other affected funds or groups and identify the fund for each event. If no other fund or group is affected, so note. Closing entries are not required.

On January 2, 20×1, Clearfield Company purchased a machine for $80,000. The mach

On January 2, 20×1, Clearfield Company purchased a machine for $80,000. The machine has an eight-year estimated useful life and an $8,000 estimated residual value. In addition, the company expects to use the machine 200,000 hours. Assuming that the machine was used 35,000 hours during 20×2, complete the following chart. If a figure cannot be determined, indicate so by placing an X in the box. (Show your work) Please explain all calculations. Method Depreciation Expense for 20×2 Caring Value at 12/31/ x2 Straight-line method: Production method: Double-declining-balance method:

On January 2, 20×1, Clearfield Company purchased a machine for $80,000. The mach

On January 2, 20×1, Clearfield Company purchased a machine for $80,000. The machine has an eight-year estimated useful life and an $8,000 estimated residual value. In addition, the company expects to use the machine 200,000 hours. Assuming that the machine was used 35,000 hours during 20×2, complete the following chart. If a figure cannot be determined, indicate so by placing an X in the box. (Show your work) Please explain all calculations. Method Depreciation Expense for 20×2 Caring Value at 12/31/ x2 Straight-line method: Production method: Double-declining-balance method:

On January 1, 2014, Sicamous Company had 200,000 outstanding common shares and 1

On January 1, 2014, Sicamous Company had 200,000 outstanding common shares and 100,000 outstanding preferred shares. The preferred shares had a stated value of $20 each and paid cumulative dividends of $1 per year. They were redeemable at the option of the issuer at a premium of 10% over their stated value. Dividends on the preferred shares had been paid up to the end of 2013. On January 1, 2014, Princeton Limited acquired 75% of the outstanding common shares of Sicamous Company and 60% of the company’s preferred shares, paying $4.5 million for the common shares and $1,350,000 for the preferred shares. On that date the shareholders’ equity of Sicamous was as follows: PrincetonSicamous Common shares$10,000,000$3,000,000 Preferred shares 5,000,000 2,000,000 Contributed surplus 1,000,000 500,000 Retained earnings 4,000,000 2,500,000 $20,000,000$8,000,000 Princeton accounted for its investments using the cost method and valued the noncontrolling interest in the common shares of Sicamous based on the price that it paid for its controlling interest. Any acquisition differential arising on the share purchase was allocated to goodwill which was to be tested annually for impairment. Impairment in 2014 amounted to $20,000. During 2014, Princeton Limited had net income of $600,000 and paid dividends of $300,000 and Sicamous had net income of $250,000 and paid dividends of $200,000. Neither company had any other equity transactions in 2014. Required: Prepare the shareholders’ equity section of Princeton Limited’s consolidated balance sheet at December 31, 2014. * * * * * 2 (

On January 1, 2013, Orr Co. established a stock appreciation rights plan for its

On January 1, 2013, Orr Co. established a stock appreciation rights plan for its executives. They could receive cash at any time during the next four years equal to the difference between the market price of the common stock and a preestablished price of $17on 400,000 SARs. The market price is as follows: 12/31/13-$22; 12/31/14-$18; 12/31/15-$20; 12/31/16-$21. On December 31, 2015, 70,000 SARs are exercised, and the remaining SARs are exercised on December 31, 2016. Prepare a schedule that shows the amount of compensation expense for each of the four years starting with 2013. .) Schedule of Compensation Expense Date Market Price Set Price Value of SARs Percent Accrued Accrued to Date Expense 12/31/13 $ $ $ % $ $ 12/31/14 % 12/31/15 % 12/31/16 % $ $

On June 12, a hurricane destroyed the warehouse of Aquatic Supplies. Using the g

On June 12, a hurricane destroyed the warehouse of Aquatic Supplies. Using the gross profit method, determine the ending inventory loss based on the data given. Inventory January 1) 2,365,000 Cash sales Jan 1- Jun 12) 1,320,000 Collection of A/R Jan 1- Jun) 12 632,000 A/R Jan 1) 824,000 A/R Jun 12) 902,000 Payments on A/P Jan 1- Jun 12) 1,290,000 A/P Jan 1) 519,000 A/P Jun 12) 629,000 Salvage Value of Inventory) 265,000 Gross profit 30%