Mini Test 2 Form C Solutions - Mini Test 2 SP 2010 C Key 1...

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Mini Test 2 SP 2010 C Key 1. Crimson Inc. recorded credit sales of $750,000, of which $600,000 is not yet due, $100,000 is past due for up to 180 days, and $50,000 is past due for more than 180 days. Crimson Inc. derives its estimate of uncollectible accounts based on an aging analysis. Based on past history, Crimson expects it will not collect 1% of the amount not yet due, 10% of the amount past due for up to 180 days, and 20% of the amount past due for more than 180 days. The allowance account had a credit balance of $1,000 before adjustment. After adjusting for bad debt expense, what is the ending balance of the allowance account? A. $28,000 B. $27,000 C. $26,000 D. $25,000 2. On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on November 17. How would Flores record the collection of cash on November 17? A. B. C. D. E. None of the above 3. Gains differ from revenues because gains: A. are recorded directly to retained earnings. B. are initially deferred by being capitalized to a balance sheet account. C. are the result of sales to customers in the ordinary course of business. D. are not from transactions involving the entity's primary, recurring business operations. E. increase income from operations on the multi-step income statement.
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4. Please consider Tim Reierson's April 22nd presentation titled: "Financial Reporting Fraud- an External Auditor's Perspective" and identify which of the below statements would be considered true: A. In the course of a financial statement audit, the external auditors have a professional responsibility to design their audit such that they detect all fraud. B. Professional skepticism is a pessimistic mind set that new auditors are expected to maintain until they get to know the client better. C. From the auditor's perspective incorporating "unpredictability" in to an audit can be thought of as a preventative control which mitigates the risk of client's committing financial statement fraud. D. Individuals who commit financial reporting fraud are typically lower level accounting clerks who have daily responsibilities requiring them to access the general ledger. E. Both B and C are true Champion Sound & Design (i.e. lab #3) has provided you with the following set of comparative accrual basis financial statements. Please use these financial statements to answer questions #5 and #6. 5. Using Champion Sound and Design's comparative financial statements provided on the previous pages, please calculate the amount of cash paid by Champion for advertising in 2008. A. -0- B. $125,000 C. $150,000 D. $250,000 E. $300,000 6. Using Champion Sound and Design's comparative financial statements provided on the previous pages, please calculate the amount of cash paid by Champion for utilities in 2007. A.
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This note was uploaded on 02/14/2011 for the course ACCY 202 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Mini Test 2 Form C Solutions - Mini Test 2 SP 2010 C Key 1...

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