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AccountingPrinciples 1
Exam 3 (Chapters
5
& 6)
Businsky Spring
2
013
Name ________________________
|
|
POINTS |
|||||
|
PROBLEM |
POSSIBLE |
RECEIVED |
||||
|
1 |
16 |
|||||
|
2 |
30 |
|||||
|
3 |
14 |
|||||
|
4 |
15 |
|||||
|
TOTAL |
75 |
PROBLEM 1 (16 points)
The merchandise inventory of Planter Co was destroyed by flood on August 15. The following data was obtained from the accounting records:
Jan 1
Inventory
$650,000
Jan 1 – August 15
Purchases (net)
1,100,000
Sales (net)
2,
600
,000
Gross Profit
Rate
40%
Instructions:
Estimate the cost of the inventory destroyed in the flood. Show all work.
|
Sales (1/1 – 8/15) |
100% |
|
|
Cost of Goods Sold (1/1 – 8/15) |
60% |
|
| Gross Profit |
40% |
| Inventory | |
|
Beg Inventory (1/1) – |
COGS (1/1 – 8/15): |
|
Purchases (1/1 – 8/15): |
|
|
Ending (8/15): |
Problem 2 (30 points)
Beginning inventory, purchases, and sales data for personal organizers are as follows:
Jan 1
Beginning Inventory
45 units @ $24
3
Sold
35 units
8
Purchased
70 units @ $32
21
Sold
65 units
30
Purchased
25
units @ $47
Instructions:
1 – Using the above transactions prepare the perpetual inventory record using each of the costing methods listed below. 2 – In the space provided below identify the ending inventory balance and cost of goods sold for
June
under each method.
a) FIFO
b) LIFO
c) Weighted Average (Round unit cost to the nearest cent and total
costs to the nearest dollar)
FIFO
| FIFO |
Purchases |
Cost of Goods Sold |
Inventory On Hand |
||||||||||||||||||||||||||
|
Date |
Quantity |
Unit Cost |
Total Cost |
||||||||||||||||||||||||||
|
Jan 1 |
45 |
$24 |
$1,080 |
||||||||||||||||||||||||||
|
Jan 3 |
35 |
$840 |
10 |
$240 |
|||||||||||||||||||||||||
|
Jan 8 |
70 |
$32 |
$2,240 |
||||||||||||||||||||||||||
|
Jan21 |
|||||||||||||||||||||||||||||
|
55 |
$1,760 |
$480 |
|||||||||||||||||||||||||||
|
Jan30 |
25 |
$47 |
$1, 17 5 |
||||||||||||||||||||||||||
|
100 |
$2,840 |
40 |
$1,655 |
Ending Inventory: $1,655
Cost of Goods Sold: $2,840
LIFO
|
LIFO |
|||
|
65 |
$2,080 |
||
|
5 |
$160 |
||
|
Ending |
$2,9 20 |
$1,575 |
Ending Inventory: $1,575
Cost of Goods Sold: $2,920
Weighted Average
| Weighted Average | ||||
|
80 |
$31 |
$2,480 |
||
|
$2,015 |
$465 |
|||
|
$2,855 |
$1,130 |
Ending Inventory: $1,130
Cost of Goods Sold: $2,855
Problem 3 (14 points)
Lawlor Lawn Service had the following transactions in June. Prepare journal entries for these transactions assuming Lawlor Lawn Service uses a perpetual inventory system.
Jun
2
Completed lawn service and received cash of $
800
5
Purchased 110 plants on account for inventory, $304, plus freight in
of $15
15
Sold 60 plants on account, $600
Consulted with a client on landscaping design for a fee of $
250
on
account
Purchased 120 plants on account for inventory, $
384
21
Paid on account, $
400
25
Sold 110 plants for cash, $
990
Extra Credit for June 30th transaction
30
Recorded the following adjusting entries
Depreciation, $30
Physical count of plant inventory, 30 plants
|
GENERAL JOURNAL |
|||||
|
DATE |
DESCRIPTION |
REF |
DEBIT |
CREDIT |
|
| June | 2 |
Cash |
800 | ||
|
Service Revenue |
|||||
| 5 |
Plant inventory |
319 |
|||
|
Accounts payable |
|||||
|
Accounts receivable |
600 | ||||
|
Sales revenue |
|||||
|
Cost of goods sold |
174 |
||||
|
Plant inventory |
|||||
| 250 | |||||
|
Service Revenue |
|||||
| 384 | |||||
| Accounts payable | 400 | ||||
| Cash | |||||
| 990 | |||||
|
337 |
|||||
|
Plant inventory |
|||||
| Depreciation expense – equip. | |||||
|
Accumulated depr. – equip. |
|||||
|
96 |
|||||
|
Plant inventory |
Problem 4 (15 total points)
1) FOB shipping point means that the:
A) seller normally pays the transportation costs.
B) buyer normally pays the transportation costs.
C) buyer and the seller split the shipping costs.
D) shipping costs are billed to the seller.
2) Which of the following is GENERALLY a merchandiser’s major cost?
A) Salary expense
B) Buildings
C) Advertising
D) Cost of goods sold
3) Which of the following describes Net sales revenue?
A) Sales less Cost of goods sold
B) Sales less Sales discounts
C) Sales less Sales returns and allowances
D) Sales less Sales discounts less Sales returns and allowances
4) Which of the following are the normal balances of Sales, Sales discounts, and Sales returns and allowances, respectively?
A) Debit, credit, and credit
B) Debit, debit, and credit
C) Credit, debit, and debit
D) Credit, credit, and debit
5) Which of the following is subtracted from Net sales revenue to arrive at Gross profit?
A) Cost of goods available for sale
B) Cost of goods sold
C) Sales discounts and Sales returns and allowances
D) Operating expenses
6) In a multi-step income statement, Operating expenses are subtracted from Gross profit to compute:
A) Net loss.
B) Other income.
C) Net income.
D) Operating income.
7) Which of the following is NOT shown on a single-step income statement?
A) Gross profit
B) Net sales revenue
C) Cost of goods sold
D) Sales discounts
8) Which of the following is the result of cost of goods sold divided by average inventory?
A) Current ratio
B) Gross profit percentage
C) Debt ratio
D) Rate of inventory turnover
9) Which of the following states that the business should use the same accounting methods from period to period?
A) Materiality concept
B) Consistency principle
C) Accounting conservatism
D) Disclosure principle
10) Which of the following states that a company must perform strictly proper accounting ONLY for items that are significant to the business’s financial statements?
A) Accounting conservatism
B) Materiality concept
C) Disclosure principle
D) Consistency principle
11) A company decides to ignore a very small error in their inventory balance. This is an example of which of the following principles?
A) Accounting conservatism
B) Materiality concept
C) Disclosure principle
D) Consistency principle
12) Which of the following states that a business must report enough information for outsiders to make knowledgeable decisions about the company?
A) Accounting conservatism
B) Materiality concept
C) Disclosure principle
D) Consistency principle
13) Which of the following requires that financial statements should report the LEAST favorable figures?
A) Accounting conservatism
B) Materiality concept
C) Disclosure principle
D) Consistency principle
14) Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?
A) Specific-unit-cost
B) Average-cost
C) Last-In, First-Out
D) First-In, First-Out
15) Ending inventory for the current accounting period is overstated by $3,500. What will be effect of this error?
A) Net income for the current period will be overstated by $3,500.
B) Cost of goods sold for the current period will be overstated by $3,500.
C) Ending inventory for the next period will be overstated by $3,500.
D) Equity at the end of the next accounting period will be overstated by $3,500.
Businsky Chapters 5 & 6 Test #3
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