Practice Exam 1

# Practice Exam 1 - Intermediate I Gleim Review Test 1[1 Zed...

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Intermediate I Gleim Review Test 1 [1] Zed Co. recorded a sale on May 1 for \$6,000 and sales on May 9 and 10 for \$9,000 and \$12,000, respectively. Zed’s credit terms are 2/10, n/30. The payment on the \$6,000 sale was received May 10. The \$12,000 sale was paid for on May 15, and the \$9,000 sale was paid for on May 29. Under the gross method and the net method, net sales should appear at which of the following amounts on the May income statement? Gross Method Net Method A. \$26,880 \$26,460 B. \$26,640 \$26,460 C. \$27,000 \$26,640 D. \$26,640 \$26,460 [2] After being held for 30 days, a 90-day, 15% interest-bearing note receivable was discounted at a bank at 18%. The proceeds received from the bank upon discounting equal the A. Maturity amount minus the discount at 18%. B. Face amount plus the discount at 18%. C. Maturity amount plus the discount at 18%. D. Face amount minus the discount at 18%. [3] Birch Construction credit sales have the following historical pattern: 70% collected in month of sale 15% collected in the first month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible The sales on open account have been budgeted for the first 6 months of the current year as shown below. January \$ 70,000 February 90,000 March 100,000 April 120,000 May 100,000 June 90,000 The estimated total cash collections during the second calendar quarter from sales made on open account during the second calendar quarter equal A. \$265,100 B. \$312,100 C. \$262,000 D. \$306,400 1

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[4] An entity had the following selected per-unit data relating to work-in-process: Selling price \$100 Completion costs 10 Historical cost 91 Replacement cost 108 Normal gross profit 20 Selling cost 5 In comparison with historical cost, what will be the per-unit impact on gross profit of measuring ending inventory? A. Reduction of \$26. B. No effect. C. Increase of \$5. D. Reduction of \$6. [5] The following information is available for Sportworld, Inc. at year-end: Cost Retail Inventory, January 1 \$153,000 \$221,000 Purchases, net 591,000 828,000 Markups, net 30,000 Markdowns, net 70,000 Sales, net 900,000 Assuming lower of cost or market is to be approximated, the estimated ending inventory under the FIFO version of the retail method is A. \$77,800 B. \$75,080 C. \$75,158 D. \$109,000 [6] Which of the following inventory costing methods reports most closely the current cost of inventory on the balance sheet? A. Specific identification. B. Last-in, first-out. C. Weighted average. D. First-in, first-out. [7] During a period of steadily decreasing prices, which inventory method produces the lowest net income? A. Moving average. B. FIFO.
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## This note was uploaded on 09/28/2011 for the course ACCT 3367 taught by Professor Staff during the Spring '08 term at University of Houston.

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Practice Exam 1 - Intermediate I Gleim Review Test 1[1 Zed...

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