Module 4 Practice.docx - Module 4 Practice 1) Hadley's...

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Module 4 Practice1)Hadley's Hardware is a small hardware store that sells a variety of nuts, bolts,nails, and screws. In the store, these items are stored in bulk containers, andcustomers can fill bags and pay by the weight. Hadley's tracks its hardwarepurchases and performs a monthly inventory count. Hadley's records an adjustingjournal entry for Cost of Goods Sold at the end of the month after the inventorycount reveals the ending inventory on hand.Which type of inventory system does Hadley's utilize?PerpetualPeriodiccorrectEither oneUnder a periodic inventory system, a company only records Cost of Goods Soldperiodically, in this case, once a month after the inventory count.
2)Suppose a piece of plant equipment that Plexco put into service on January 1, 2010 at atotal cost of $310,000 with an expected useful life of 5 years and a salvage value of$70,000 is sold on January 1, 2015 for $60,000. What would the journal entry look like torecord this sale?
You are correct! This transaction results in a reduction of the PP&E account of the initial,gross value of the equipment (credit of $310,000) offset by receipt of cash (debit of$60,000), and the reduction of accumulated depreciation (debit of $240,000), and losson the disposal of the asset (debit of $10,000).3)Tea Online is a new online retailer of premium teas. During the first month theymade the following purchases of teabags and had the following sales of tea bags:January 1: Purchased 200 tea bags for $3 each.January 15: Purchased 100 tea bags for $4 each.January 31: Sold 250 teabags.What would be the Cost of Goods Sold if they useFIFO?
4)Which of the following arises when Taxable Income is less than Income BeforeTaxes due to a temporary timing difference?
Deferred Tax LiabilitycorrectThis is the amount that arises when Taxable Income is less than Income Before Taxesdue to a temporary timing difference.Deferred Tax AssetThis is the amount that arises when Taxable Income exceeds Income Before Taxes dueto a timing difference.

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Term
Fall
Professor
N/A
Tags
Depreciation, Generally Accepted Accounting Principles, Goods Sold

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