acct

this is the assignment

Page

1 of 9

Name: __________________________ Date: ______

_______

You must complete both Part 1 (Wiley Plus) & Part 2 of Quiz 2

20 Questions: 12 MC Questions; 7 Problems; 1 essay

Ch 5 – 6 – 7 … Timed Exam: 3 hours

UMUC – ACCT 220 Due April 24, 2013
This exam is to be completed without the assistance of any other person.

You may use only the resources provided by your instructor for this class.

** Save this file and include your name in the file name: Steve_Harvey_Quiz_2

You may create an Excel and / or Word File for your work. Please verify that each page prints out

formatted with your name and page number on the page. Excel files should show gridlines.

Excel ‘page format’ has options for grid lines (sheet) and headers/footers.

At a minimum, use print preview so you can see how the work will print out.

I pledge on my honor that I have not given or received any unauthorized assistance on this

examination. In addition, I pledge that I will not disclose to, or discuss the contents of this

examination with, students who have not taken it.

_________________________________________________________________________

Signed

12 MC (place answer on the line); 1 essays , 7 problem presentation questions (may require JEs or

financial statement presentations)

NOTE: some problems have several ‘calculation’ presentations or tasks

100 total points; 100 points = 100%

For all questions, assume no other transactions or activities have taken place during the period except

as noted

Page 2 of 9

Prepare and present calculations for partial credits for questions with calculations and presentations.

Name: __________________________ Date: _____________

1. The IASB and FASB are working on a converged statement of financial position using

the headings of

A) assets, liabilities, and owner’s equity. Answer: ________

B) revenues and expenses.

C) assets, liabilities, revenues, expenses and owner’s equity.

D) operating, investing, and financing.

2. The only acceptable cost flow assumptions under IFRS are

A) FIFO and LIFO. Answer: ________

B) FIFO and average.

C) LIFO and average.

D) FIFO, LIFO and average.

3. On July 9, Serta Company sells goods on credit to Walmart Company for $3,000, terms

1/10, n/60. Serta receives payment on July 18. The entry by Serta on July 18 is:

Answer: ________

A) Cash 3,000

Accounts Receivable 3,000

B) Cash 3,000

Sales Discounts 30

Accounts Receivable 2,970

C) Cash 2,970

Sales Discounts 30

Accounts Receivable 3,000

D) Cash 3,030

Cash 30

Accounts Receivable 3,000

4. In a perpetual inventory system, the Cost of Goods Sold account is used

A) only when a cash sale of merchandise occurs. Answer: ________

B) only when a credit sale of merchandise occurs.

C) only when a sale of merchandise occurs.

D) whenever there is a sale of merchandise or a return of merchandise sold.

Page 3 of 9

5. As a result of a thorough physical inventory, Hallmark Company determined that it had

inventory worth $270,000 at December 31, 2012. This count did not take into

consideration the following facts: American Greetings Consignment currently has goods

worth $47,000 on its sales floor that belong to Hallmark but are being sold on

consignment by American Greetings. The selling price of these goods is $75,000.

Hallmark purchased $22,000 of goods that were shipped on December 27. FOB

destination, that will be received by Hallmark on January 3. Determine the correct

amount of inventory that Hallmark should report.

A) $270,000. Answer: ________

B) $290,000.

C) $317,000.

D) $337,000.

6. Borders Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and

sales during the month of January were as follows:

Date Purchases Sales

Jan. 14 375 @ $28

17 250 @ $20

25 250 @ $22

29 260 @ $32

Borders does not maintain perpetual inventory records. According to a physical count,

365 units were on hand at January 31.

The cost of the inventory at January 31, under the FIFO method is:

Answer: ________

A) $6,570.

B) $7,300.

C) $7,800.

D) $8,030.

Page 4 of 9

7. Borders Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and

sales during the month of January were as follows:

Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22
29 260 @ $32

Borders does not maintain perpetual inventory records. According to a physical count,
365 units were on hand at January 31.

The cost of the inventory at January 31, under the LIFO method is:

Answer: ________

A) $6,570.
B) $7,300.
C) $7,800.
D) $8,030.

8. A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390

June 10 200 units 585

June 15 200 units 630

June 28 150 units 510

$2,115

A physical count of merchandise inventory on June 30 reveals that there are 200 units

on hand. Using the LIFO inventory method, the value of the ending inventory on June

30 is

Answer: ________

A) $536.

B) $668.

C) $1,447.

D) $1,564.

Page 5 of 9

9. A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390
June 10 200 units 585
June 15 200 units 630
June 28 150 units 510
$2,115

A physical count of merchandise inventory on June 30 reveals that there are 200 units

on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold

for June is

Answer: ________
A) $536.
B) $668.
C) $1,447.
D) $1,564.

10. A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390
June 10 200 units 585
June 15 200 units 630
June 28 150 units 510
$2,115

A physical count of merchandise inventory on June 30 reveals that there are 200 units

on hand. Using the average-cost method, the amount allocated to the ending inventory

on June 30 is

A) $536. Answer: ________

B) $604.

C) $668.

D) $1,511.

Page 6 of 9

11. A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390
June 10 200 units 585
June 15 200 units 630
June 28 150 units 510

$2,115

A physical count of merchandise inventory on June 30 reveals that there are 200 units

on hand.

The inventory method which results in the highest gross profit for June is

Answer: ________

A) the FIFO method.

B) the LIFO method.

C) the weighted average unit cost method.

D) not determinable.

12. Evergreen Company’s inventory records show the following data:

Units Unit Cost

Inventory, January 1 5,000 $9.20

Purchases: June 18 4,500 8.00

November 8 3,000 7.00

A physical inventory on December 31 shows 2,000 units on hand. Evergreen sells the

units for $13 each. The company has an effective tax rate of 20%. Evergreen uses the

periodic inventory method. The weighted-average cost per unit is

Answer: ________

A) $8.00.

B) $8.01.

C) $8.24.

D) $9.30.

Page 7 of 9

13. The Costco Company accumulates the following cost and market data at December 31,

2012:

Inventory Categories Cost Data Market Data

Camera $11,000 $9,900

Camcorders 7,800 8,500

DVDs 14,000 12,000

Record the Journal Entry for necessary adjustments using the lower-of-cost-or-market

value of the inventory method as of December 31, 2012.

14. At December 31, 2012, the following information was available for Westinghouse

Company: ending inventory $22,600; beginning inventory $21,400; cost of goods sold

$171,000; and sales revenue $430,000.

Calculate the inventory turnover ratio and days in inventory for Westinghouse.

15. The following information is available for LiteBrite Company:

Beginning inventory 600 units at $4

First purchase 900 units at $6

Second purchase 500 units at $7.20

Assume that LiteBrite uses a periodic inventory system and that there are 700 units left

at the end of the month.

Instructions

Compute the cost of ending inventory under the

(a) FIFO method.

(b) LIFO method.

Page 8 of 9

16. The following information is available for LiteBrite Company:

Beginning inventory 600 units at $4
First purchase 900 units at $6
Second purchase 500 units at $7.20

Assume that LiteBrite uses a periodic inventory system and that there are 700 units left
at the end of the month.

Instructions

Compute each of the following under the average-cost method:

(a) Cost of ending inventory.

(b) Cost of goods sold.

17. Walgreen Pharmacy reported cost of goods sold as follows:

2012 2013

Beginning inventory $ 54,000 $ 64,000

Cost of goods purchased 847,000 891,000

Cost of goods available for sale 901,000 955,000

Ending inventory 64,000 55,000

Cost of goods sold $837,000 $900,000

Lincoln, the accountant, made two errors:

(1) 2012 ending inventory was overstated by $7,000.

(2) 2013 ending inventory was understated by $16,000.

Instructions

Assuming the errors had not been corrected, indicate the dollar effect that the errors had

on the items appearing on the financial statements listed below. Also indicate if the

amounts are overstated (O) or understated (U).

2012 2013

Overstated/ Overstated/

Amount Understated Amount Understated

Total assets $_________ _______ $_________

_______

Owner’s equity

$_________

_______

$_________

_______

Cost of goods sold

$_________

_______

$_________

_______

Net income

$_________

_______

$_________

_______

Page 9 of 9

18. Wyman’s Department Store prepares monthly financial statements but only takes a

physical count of merchandise inventory at the end of the year. The following

information has been developed for the month of July:

At Cost At Retail

Beginning inventory $ 30,000 $ 50,000

Merchandise purchases 99,000 150,000

The net sales for July amounted to $142,000.

Instructions

Use the retail inventory method to estimate the ending inventory at cost for July. Show

all computations to support your answer.

19. FIFO and LIFO are the two most common cost flow assumptions made in costing

inventories. The amounts assigned to the same inventory items on hand may be different

under each cost flow assumption. If a company has no beginning inventory, explain the

difference in ending inventory values under the FIFO and LIFO cost bases when the

price of inventory items purchased during the period have been (1) increasing, (2)

decreasing, and (3) remained constant.

20. Compute the lower-of-cost-or-market valuation (and prepare any necessary adjusting

entries as of March 31, 2013) for DeBartolo Company’s total inventory based on the

following:

Inventory Categories Cost Data Market Data

A as of 3/31/2013 $18,000 $16,900

B as of 3/31/2013 13,900 14,600

C as of 3/31/2013 21,000 20,500