acct2exam

acct2exam - Review Problem For Exam 2 Zaphod Inc. had the...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Review Problem For Exam 2 Zaphod Inc. had the following transactions in 2002 : January 1 Beg Inv 1000 units @ $10.00 each February 14 Purchased 500 units @ $11.00 each March 14 Sold 500 units @ $30.00 each August 7 Purchased 250 units @ $13.00 each November 10 Sold 750 units @ $32.00 each Assume that Zaphod uses LIFO Periodic to account for its inventory. All sales and purchases are made on account. Zaphod estimates that warranty costs will be 5% of gross sales. On January 1, 2002 Zaphod had a balance in Accounts Receivable of $20,000 and a balance in Allowance for Doubtful accounts of $600. Purchased a delivery truck on January 1, 2000 for $30,000. The truck has a useful life of 4 years and a salvage value of $5,000. Zaphod uses the double-declining balance method for accounting for depreciation. Wrote off a customer’s account for $250. Paid $500 repair costs for defective merchandise sold under warranty. Received $24,000 for partial payment of accounts receivable. On December 1, 2002, Zaphod paid gross salaries of $500. 20% is withheld for income tax. Social Security is 6.2% and Medicare taxes are 1.45%. Zaphod estimates that 3% of the ending balance of Accounts Receivables will be uncollectible. Zaphod Inc. uses the allowance method to account for bad debts. REQUIRED What is net income in 2002? What is ending inventory on the December 31, 2002 Balance Sheet? What is the book value of the delivery truck on the December 31, 2002 Balance Sheet? How much did Zaphod remit in total to the government for payroll taxes? What was the employee’s net pay (take home pay)? What is the net realizable value of Accounts Receivable on the December 31, 2002 Balance Sheet? What is the Amount of Warranties Payable on the December 31, 2002 Balance Sheet? PRACTICE QUESTIONS Exam II -- Chapters 5, 6, 7 These questions are not meant to reflect the total content or the difficulty of the exam. Doing them will NOT substitute for reading the chapters, attending the lectures, and doing lots and lots of homework problems in order to LEARN the material. 1. A deposit in transit on a bank (cash) reconciliation should be: a. Added to the depositor's book cash balance. b. Subtracted from the depositor's book cash balance. c. Added to the bank balance shown for the depositor. d. Subtracted from the bank balance shown for the depositor. e. None of the above is correct. 2. Assuming the allowance method for bad debts is used, when a customer's uncollectible account is written off, a decrease should be made to: a. Bad debt expense.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
b. Sales revenue. c. Accounts receivable. d. Retained earnings. 3. Which generally accepted accounting principle best supports the need for the account Allowance for Doubtful Accounts? a.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

acct2exam - Review Problem For Exam 2 Zaphod Inc. had the...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online