2007-05-25_050934_Quiz - Copy

2007-05-25_050934_Quiz - Copy - .Under the allowance method...

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.Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account a. increases the allowance for uncollectible accounts. b. has no effect on the allowance for uncollectible accounts. c. has no effect on net income . d. decreases net income. 2. The following accounts were abstracted from Todd Co.'s unadjusted trial balance at December 31, 2007: Debit Credit Accounts receivable $750,000 Allowance for uncollectible accounts 8,000 Net credit sales $3,000,000 Todd estimates that 2% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2007, the allowance for uncollectible accounts should have a credit balance of a. $60,000. b. $52,000. c. $23,000. d. $15,000. 3. On January 1, 2006, Marr Co. exchanged equipment for a $400,000 zero-interest- bearing note due on January 1, 2009. The prevailing rate of interest for a note of this type at January 1, 2006 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be included in Marr's 2007 income statement? 4. In preparing its August 31, 2007 bank reconciliation, Adel Corp. has available the following information: Balance per bank statement, 8/31/07 $21,650 Deposit in transit, 8/31/07 3,900 Return of customer's check for insufficient funds, 8/30/07 600 Outstanding checks, 8/31/07 2,750 Bank service charges for August 100 At August 31, 2007, Adel's correct cash balance is
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5. Sandy, Inc. had the following bank reconciliation at March 31, 2007: Balance per bank statement, 3/31/07 $37,200 Add: Deposit in transit 10,300 47,500 Less: Outstanding checks 12,600 Balance per books, 3/31/07 $34,900 Data per bank for the month of April 2007 follow: Deposits $46,700 Disbursements 49,700 All reconciling items at March 31, 2007 cleared the bank in April. Outstanding checks at April 30, 2007 totaled $6,000. There were no deposits in transit at April 30, 2007. What is the cash balance per books at April 30, 2007? 6. How should the following costs affect a retailer's inventory valuation? Freight-in Interest on Inventory Loan a. Increase No effect b. Increase Increase c. No effect Increase d. No effect No effect 7. The following information applied to Grey, Inc. for 2007: Merchandise purchased for resale $300,000 Freight-in 8,000 Freight-out 5,000 Purchase returns 2,000 Grey's 2007 inventoriable cost was = $300,000 + $8,000 - $2,000
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8. Cole Corp.'s accounts payable at December 31, 2007, totaled $800,000 before any necessary year-end adjustments relating to the following transactions:  On December 27, 2007, Cole wrote and recorded checks to creditors totaling $350,000 causing an overdraft of $100,000 in Cole 's bank account at December 31, 2007. The checks were mailed out on January 10, 2008.  On December 28, 2007, Cole purchased and received goods for $150,000, terms 2/10, n/30. Cole records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2008.  Goods shipped f.o.b. destination on December 20, 2007 from a vendor to Cole were received January 2, 2008. The invoice cost was $65,000. At December 31, 2007, what amount should Cole report as total accounts payable?
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