w06_MT2_136a2

w06_MT2_136a2 - March 6, 2006 Anderson ECON 136A 11AM...

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March 6, 2006 Anderson ECON 136A 11AM Midterm #2 Name _________________________ Answer questions #1-25 on your green scantron and the problems in your blue book (in ink if you would like to retain the right to regrade). ------------------------- 1. Travel advances should be reported as a. supplies. b. cash because they represent the equivalent of money. c. investments. d. none of these. 2. Which of the following methods of determining bad debt expense does not properly match expense and revenue? a. Charging bad debts with a percentage of sales under the allowance method. b. Charging bad debts with an amount derived from a percentage of accounts receivable under the allowance method. c. Charging bad debts with an amount derived from aging accounts receivable under the allowance method. d. Charging bad debts as accounts are written off as uncollectible. 3. Which of the following methods of determining annual bad debt expense best achieves the matching concept? a. Percentage of sales b. Percentage of ending accounts receivable c. Percentage of average accounts receivable d. Direct write-off 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 a. $80,000. b. $79,500. c. $71,500. d. $75,500. ------------------------------ 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
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Midterm #2--Page 2 5. If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the adjustment is a. $4,000. b. $4,111. c. $4,250. d. None of the above 6. On December 31, 2004, Eller Corporation sold for $50,000 an old machine having an original cost of $90,000 and a book value of $40,000. The terms of the sale were as follows: $10,000 down payment $20,000 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2004 rounded to the nearest dollar? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.) a. $35,182. b. $45,182. c. $40,000. d. $70,364. 7. The cash account shows a balance of $38,000 before reconciliation. The bank statement does not include a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of $940 and a customer's check for $220 was returned because it was NSF. A customer's check for $450 was recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the cash account was a. $38,612. b. $38,648.
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This note was uploaded on 05/18/2011 for the course ECON 136A taught by Professor Anderson during the Spring '08 term at UCSB.

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w06_MT2_136a2 - March 6, 2006 Anderson ECON 136A 11AM...

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