Exam II-Detailed Solution-311F06.

Exam II-Detailed Solution-311F06. - Page 1 ACC 311 Fall...

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Unformatted text preview: Page 1, ACC 311, Fall 2006, Exam II, Form DETAILED SOLUTION Fall 2006, Exam II, Combined Keys Question Form A Form B Form C 1 D C B 2 D A B or D 3 B B C 4 B D B 5 C B C 6 B or D C B 7 A C C 8 A C A 9 C D A 10 A B or D B 11 B C C 12 A B B 13 C D D 14 C B A 15 B C B 16 C A B 17 A A C 18 B B C 19 D A D 20 A B D 21 C B A 22 B C A 23 B A C 24 C C A 25 C A C A DETAILED SOLUTION FOLLOWS Page 2, ACC 311, Fall 2006, Exam II, Form DETAILED SOLUTION MULTIPLE CHOICE (2) Points Each) 1. Form A: Q5 Form B: Q11 Form C: Q3 As of December 31, Chief Company has a balance of \$10,000 in accounts receivable of which \$1,000 is overdue. Chief has a credit balance of \$100 in the allowance for doubtful accounts. Chief estimates its bad debts losses at 1% of accounts not yet due and 10% of accounts overdue. What adjustment should Chief make to the allowance for doubtful accounts? Note : “A4DA” means Allowance For Doubtful Accounts & “A/R” means Accounts Receivable A/R Current: \$ 9,000 x 1% = \$ (90) A4DA A) \$120 (credit) A/R Current: \$ 1,000 x 10% = \$(100) A4DA . B) \$105 (credit). A/R Total: \$10,000 \$(190) A4DA Desired Balance C) \$ 90 (credit). Less: \$(100) A4DA Current Balance D) \$100 (credit). \$ (90) A4DA Adjustment D) None, the current balance is correct. 2. Form A: Q13 Form B: Q15 Form C: Q5 The Walt Disney Company reported revenue of \$30,752 million for 2004, all of which represent credit sales. Their accounts receivable balance was \$5,330 million at the end of 2004 and \$4,912 million at the end of 2003. Assuming no accounts were written-off, cash collected from customers equals A/R Beginning Balance \$ 4,912 (2003 Ending Balance) A) \$25,013 million + Credit Sales 30,752 B) \$28,926 million-A/R Ending Balance 5,330 C) \$30,334 million = Cash Collected \$30,334 D) None of the above 3. Form A: Q23 Form B: Q5 Form C: Q15 Bad debt expense should A) appear on the balance sheet as a contra-asset. Comment : This is true for the A4DA B) appear on the income statement as part of selling expenses. C) appear on the income statement as a contra- revenue. Comment : Bad Debt Expense is D) not appear in the financial statements. not a component of E) None of the above is correct. Net Sales 4. Form A: Q11 Form B: Q21 Form C: Q12 Which of the following statements is false ? A) Sales returns and allowances are always treated as a contra- revenue. B) Sales returns and allowances, sales discounts and credit card discounts are always treated as selling expenses. C) Credit card discounts and sales discounts cause cash collected from sales to be less than sales revenues. D) Sales discounts are used to encourage early payment by customers. Page 3, ACC 311, Fall 2006, Exam II, Form DETAILED SOLUTION 5. Form A: Q21 Form B: Q8 Form C: Q25 When a credit sale is made with terms of 2/10, net 30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry?...
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This note was uploaded on 03/23/2008 for the course ACC 311 taught by Professor Charrier during the Spring '08 term at University of Texas.

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Exam II-Detailed Solution-311F06. - Page 1 ACC 311 Fall...

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