1. Hansen Company uses the periodic inventory method and had the following inventory information available:
Units Unit Cost Total Cost
- 1/1 Beginning Inventory 100 $3 $ 300
- 1/20 Purchase 500 $4 2,000
- 7/25 Purchase 100 $5 500
- 10/20 Purchase 300 $6 1,800
- 1,000 $4,600
A physical count of inventory on December 31 revealed that there were 375 units on hand. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is __?
2. Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?
Select one:
a. Bad Debts Expense 10,000 Allowance for Doubtful Accounts 10,000
b. Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000
c. Bad Debts Expense 8,000 Accounts Receivable 8,000
d. Bad Debts Expense 8,000 Accounts Receivable 8,000
3. The financial statements of the Melton Manufacturing Company reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?
Select one:
a. 52.1
b. 29.2
c. 21.9
d. 36.5
4. The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.
5. The financial statements of the Belfry Manufacturing Company reports net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?
Select one:
a. 40 times
b. 80 times
c. 54.7 times
d. 50 times
6. Assume Grammar Company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000, purchases of $75,000, and sales of $125,000. Grammar closes its records once a year on December 31. In the accounting records, the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was
Select one:
a. equal to $5,000.
b. more than $5,000.
c. less than $5,000.
d. less than $5,000.
7. The factor which determines whether or not goods should be included in a physical count of inventory is
Select one:
a. physical possession.
b. legal title.
c. management's judgment.
d. whether or not the purchase price has been paid.
8. Nilson Company gathered the following reconciling information in preparing its August bank reconciliation:
Cash balance per books, 8/31 $7,000
Deposits in transit 300
Notes receivable and interest collected by bank 1,700
Bank charge for check printing 40
Outstanding checks 4,000
NSF check 340
The adjusted cash balance per books on August 31 is
Select one:
a. $8,320
b. $8,020
c. $4,620
d. $4,920
9. Merchandising companies that sell to retailers are known as
Select one:
a. brokers.
b. corporations.
c. wholesalers.
d. service firms.
10. Alpha First Company just began business and made the following four inventory purchases in June:
- June 1 150 units $ 780
- June 10 200 units 1,170
- June 15 200 units 1,260
- June 28 150 units 990
- $4,200
A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is
Select one:
a. $1,040.00
b. $1,072.50
c. $1,305.00
d. $1,320.00
11. At April 30, Kessler Company has the following bank information:
- Cash balance per bank $4,600
- Outstanding checks $280
- Deposits in transit $550
- Credit memo for interest $10
- Bank service charge $20
What is Kessler's adjusted cash balance on April 30?
Select one:
a. $4,860
b. $4,880
c. $4,330
d. $4,870
12. Financial information is presented below:
- Operating Expenses $ 45,000
- Sales Returns and Allowances 13,000
- Sales Discount 6,000
- Sales 150,000
- Cost of Goods Sold 67,000
The profit margin ratio would be
Select one:
a. .127
b. .132
c. .139
d. .145
13. ogan Industries had the following inventory transactions occur during 2010:
- Units Cost/unit
- Feb. 1, 2010 Purchase 18 $45
- Mar. 14, 2010 Purchase 31 $47
- May 1, 2010 Purchase 22 $49
The company sold 51 units at $63. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)
Select one:
a. $2,441
b. $2,365
c. $848
d. $772