Part IV Inventory (22 Total Points)
Inventory Practice Problems
All work is to be done on the attached pages.
For problems requiring computations, work must be shown in order to get
credit. Zero points will be given to any correct answer
Accrued vs. Deferred
Have the revenue been earned? Yes
Has there been a transfer of payment? No
Company earned revenue for service just
rendered. No cash has been collected.
Journal entry for recognition of revenue
ESSENTIAL CONCEPTS OF BUSINESS FOR LAWYERS
Robert J. Rhee
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION TO ACCOUNTING . 2
Importance of Accounting . 2
Financial Accounting Statements. 2
Uses and Limitations . 5
CHAPTER 2: BALANCE SHEET
Financial Statements and Business Decisions
Multiple Choice Questions
Question 1) Over Armour, Inc. sold 5 shirts that cost $6 each toits customers for $10 each.
Total sales revenue equals $_.
Question 2) An owner gives $5,000 cash to his comp
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North Company Problems
(3 Points) On July 1, 2010, North Company lent South Company $450,786 on a 3-year,
$600,000 non-interest bearing note. How much interest revenue should North
Company recognize from this note on its income statement for the year
Suppose Home is a small country. Use the graphs below to answer the questions.
a. Calculate Home consumer surplus and producer surplus in the absence of trade.
Answer: Total surplus in the absence of trade is 35.
Consumer surplus without tariff:
Buckeye Inc. sold inventory on an installment basis to Badger Company on January 1,
2010. The cost of the inventory was $100,000 and the selling price of the
inventory is $200,000. Badger agreed to pay Buckeye four equal annual
installments of $57,718 beg
. Assume Hoya makes all inventory purchases and sales on credit. Indicate in each of
the spaces provided the effect of the described errors on the various elements
of Hoyas financial statements. Use the following codes: OS = amount is
overstated; US = amo
1. During 2009, Harris Construction Company contracted with the city of Chicago to
construct a bridge across the Chicago River at a price of $20,000,000. Harris
expects the cost of the dam to be $17,000,000. The following data is available
for the contrac
1. (16 Total Points) Assume the following information was found in Ravens Companys
accounting records relating to 2012. Also assume that Ravens uses the aging
method of accounts receivable to compute bad debt expense.
Accounts Receivable, January 1,
1. List one advantage and one disadvantage of the direct write-off method (as
opposed to the allowance method) of accounting for bad debts.
An advantage is that the direct write-off method is accurate and requires no
Use the fiscal 2011 John Deere financial statements to answer the following
1. (1 Point) What is John Deeres LIFO reserve at the end of fiscal 2011?
2. (1 Point) What is the pre-tax benefit of John Deeres LIFO liquidation d
. (10 Total Points) Washington Inc. uses LIFO with a periodic inventory system to
account for its inventory. Its 2011 inventory records reveal the following
Cost per Unit
Course: Principles of Accounting
Number/Section: ACCT 001 Section 1
2015 Spring Semester
Car Barn 201 Mon/Wed 2:00-3:15
Professor: Edward W Machir, CPA
Office Hours: By appointment
Phone: 202-333-1914 (H) / 214-543-2515 (Cell)