ce_b - COMPREHENSIVE EXAMINATION B PART 2(Chapters 79...

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COMPREHENSIVE EXAMINATION B PART 2 (Chapters 7–9) Problem B-I — Multiple Choice — Cash and Receivables. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. _____ 1. When should the loss on an uncollectible account receivable be recorded as an expense for accrual accounting purposes? a. When it is determined that an account cannot be collected. b. In the same period in which the sale on account occurs. c. When the balance is past due for more than 3 months. d. When a lawyer indicates that collection efforts would cost more than the account is worth. _____ 2. How should unearned discounts, finance charges, and interest included in the face amount of installment accounts receivable be presented in the balance sheet? _____ 3. Durler Company's account balances at December 31 for Accounts Receivable and the related Allowance for Doubtful Accounts are $600,000 and $13,000, respectively. From an analysis of accounts receivable, it is estimated that $28,000 of the December 31 receivables will be uncollectible. After adjustment for the above facts, the net realizable value of accounts receivable would be _____ 4. Which group of items listed below should be included in the cash account? _____ 5. Which of the following methods of accounting for uncollectible accounts does not properly match costs with revenues? a. Percentage of sales b. Percentage of receivables c. Direct write-off d. Aging schedule
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Comprehensive Exam B _____ 6. Certain information relative to the 2010 operations of Ball Co. follows: Accounts receivable, January 1, 2010 $24,000 Accounts receivable collected during 2010 46,000 Cash sales during 2010 12,000 Inventory, January 1, 2010 18,000 Inventory, December 31, 2010 16,500 Purchases of inventory during 2010 40,000 Gross profit on sales 13,500 What is Ball's accounts receivable balance at December 31, 2010? Problem B-II — Lower of Cost or Market Presented below is data relative to the 12/31/10 inventory of Lance Company: Number Units Original Cost Total Current Item In Inventory Per Unit Original Cost Replacement Cost A 3,000 $1.09 $3,270 $1.08 B 3,000 1.30 3,900 1.15 C 3,000 1.50 4,500 1.05 D 3,000 1.60 4,800 1.65 E 3,000 1.80 5,400 1.70 Total 15,000 $21,870 Appropriate Upper Lower Inventory Limit Limit Designated Valuation Item ("Ceiling") ("Floor") Market (Totals) A B C D E Total Additional Data: Selling price is $2.00/unit for all items. Disposal costs amount to 10% of selling price and a "normal" profit is 35% of selling price.
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