2005 Fall Accounting_011_exam_2__Fall_2005_Answers

2005 Fall Accounting_011_exam_2__Fall_2005_Answers - Name...

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Name _____________________ Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Exam #2-Answer Key October 26, 2005 Instructions: You have 100 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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Name ________________ Multiple Choice/Short Answer 10 questions, 4 points each 1. The following information is available for Reagan Company: Allowance for doubtful accounts at December 31, 2003 $ 8,000 Credit sales during 2004 400,000 Accounts receivable deemed worthless and written off during 2004 9,000 As a result of a review and aging of accounts receivable in early January 2005, however, it has been determined that an allowance for doubtful accounts of $9,500 is needed at December 31, 2004. What amount should Reagan record as "bad debt expense" for the year ended December 31, 2004? a. $8,500 b. $9,500 c. $10,500 d. $17,500 Use the following information for questions 2 and 3. A trial balance before adjustments included the following: Debit Credit Sales $425,000 Sales returns and allowance $14,000 Accounts receivable 53,000 Allowance for doubtful accounts 760 2. If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the adjustment is 3. If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the adjustment is 4. 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 2
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Name ________________ 5. 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 effect of the commitment of Stone Co. to purchase the 200,000 pounds of cocoa is a. Cocoa Inventory ............................................................ 600,000 Accounts Payable .............................................. 600,000 b. Cocoa Inventory ............................................................ 460,000 Loss on Purchase Commitments .................................. 140,000 Accounts Payable .............................................. 600,000 c. Estimated Loss on Purchase Commitments ............ 140,000 Estimated Liability on Purchase Commitments 140,000 d. No entry would be necessary in 2004.
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