2005 Spring Accounting_011_exam_2__Spring_2005__answer_key

2005 Spring Accounting_011_exam_2__Spring_2005__answer_key...

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Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Exam #2-Answer Key March 24, 2005 Instructions: You have 150 minutes. Answer the questions on the pages provided and please remember to show all work so that you may receive partial credit. Also please put your name on each page in case the pages get separated. Good luck!
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Multiple Choice 15 questions, 3 points each 1. During the year, Jantz Company made an entry to write off a $4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $80,000 and the balance in the allowance account was $4,500. The net realizable value of accounts receivable after the write-off entry was a. $80,000. b. $79,500. c. $71,500. d. $75,500. Balance in A/R after write off 76.000 less balance in allowance account after write off 500 yields $75,500. Use the following information for questions 2 - 5 James Co. has the following data related to an item of inventory: Inventory, March 1 200 units @ $4.20 Purchase, March 7 700 units @ $4.40 Purchase, March 16 140 units @ $4.50 Inventory, March 31 300 units 2. The value assigned to ending inventory if James uses LIFO is a. $1,334. b. $1,280. c. $1,260. d. $1,350. LIFO is the same as first-in still-here (FISH). So ending inventory consists of the first 300 units acquired. So ending inventory is 200*4;20 + 100*4.40 or 1,280. 3. The value assigned to cost of goods sold if James uses FIFO is a. $1,334. b. $1,280. c. $3,270. d. $3,216 . Cost of goods sold would be equal to the cost of the first 740 units purchased (goods available for sale are 1,040 units less ending inventory of 300 units). Cost is thus 200*4.20 + 540*4.40 = $3,216. 4. The value assigned to ending inventory if James uses average cost is a. $1,313 b. $1,260 c. $1,325 d. $1,335 Total cost of goods available for sale is $4,550. Divided by 1,040 units gives us a average cost per unit of $4.375. 300*4.375=$1312.5
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5. The value assigned to cost of goods sold if James uses average cost is a. $3,237 b. $3,290 c. $3,225 d. $3,215 Cost of goods available for sale of $4,550 less $1,313 = 3,237 6. During 2004, Stone Co., a manufacturer of chocolate candies, contracted to purchase 200,000 pounds of cocoa beans at $3.00 per pound, delivery to be made in the spring of 2005. Because a record harvest is predicted for 2005, the price per pound for cocoa beans had fallen to $2.30 by December 31, 2004. Of the following journal entries, the one which would properly reflect in 2004 the
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This note was uploaded on 05/19/2008 for the course ACCT 3511 taught by Professor Balsam during the Spring '07 term at Temple.

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2005 Spring Accounting_011_exam_2__Spring_2005__answer_key...

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