Question 1

The cost of goods available for sale is calculated as
A)beginning inventory plus ending inventory.
B)beginning inventory minus ending inventory.
C)beginning inventory plus the cost of goods acquired during the period.
D)cost of goods acquired during the period minus ending inventory.

Accepted Answer

The cost of goods available for sale is the sum of beginning inventory and the cost of goods acquired during the period. This is because these are the total items that were available for sale during the period. Ending inventory is not included in this calculation because it represents goods that have not yet been sold and are still on hand at the end of the period.

Question 2

Sale of receivables without recourse Sparwood Manufacturing factored $250,000 of their accounts receivable to General Factor Corp., on a without recourse basis.The receivables are transferred to General Factor, who takes over the full responsibility of collection.General Factor charged a finance charge of 4% of the dollar value of the receivables, and withheld 5% of the receivable value. Instructions
a)Prepare the general journal entry to reflect this transaction on Sparwood's books.
b)Prepare the general journal entry to reflect this transaction on General Factor's books.

Accepted Answer

The answer of Sale of receivables without recourse Sparwood Manufacturing...

Question 3

The following accounts were included on Mali Co.'s unadjusted trial balance at December 31, 2013:  Mali estimates that 1.5 % of the gross accounts receivable will become uncollectible.After the proper adjustment at December 31, 2013, the allowance for doubtful accounts should have a credit balance of
A)$23,750.
B)$12,750.
C)$11,000.
D)$ 1,750.

Accepted Answer

The answer of The following accounts were included on Mali...

Question 4

Lebanon Ltd.prepared an aging of its accounts receivable at December 31, 2013 and determined that the net realizable value of the receivables was $290,000.Additional information for calendar 2013 follows:  For the year ended December 31, 2013, Lebanon's bad debt expense should be
A)$20,000.
B)$23,000.
C)$16,000.
D)$14,000.

Accepted Answer

The answer of Lebanon Ltd.prepared an aging of its accounts...

Question 5

A hardware retailer typically maintains the following inventory account(s):
A)Merchandise Inventory.
B)Raw Materials and Work in Process only.
C)Raw Materials, Work in Process and Finished Goods.
D)Work in Process and Merchandise Inventory.

Accepted Answer

A hardware retailer sells finished goods, and does not manufacture products. Therefore, they would only have a Merchandise Inventory account to track the inventory they purchase to resell to their customers.

Question 6

Entries for bad debt expense Angola Corp.'s unadjusted trial balance included the following:  Instructions Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using 
a)4% of gross accounts receivable and
b)1.5% of net sales.

Accepted Answer

The answer of Entries for bad debt expense Angola Corp.'s...

Question 7

Note with fair value not equal to cash consideration On January 1, 2013, Senegal Corp.lent $50,000 to its CEO, interest-free.However, the loan is repayable in five instalments, each December 31, until paid.The market rate for similar loans (with similar credit risk)is 4%. Instructions
a)Calculate the present value (fair value)of this loan (round to the nearest dollar).
b)Prepare the journal entry to record this transaction.

Accepted Answer

The answer of Note with fair value not equal to...

Question 8

A manufacturing company typically maintains the following inventory account(s):
A)Merchandise Inventory.
B)Raw Materials and Work in Process only.
C)Raw Materials, Work in Process and Finished Goods.
D)Work in Process and Merchandise Inventory.

Accepted Answer

A manufacturing company typically maintains inventory accounts for raw materials (which have not yet been used in production), work in process (which is partially completed products), and finished goods (which are completed products ready for sale). Therefore, the correct option is Raw Materials, Work in Process and Finished Goods.

Question 9

If the month-end bank statement shows a balance of $49,000, outstanding cheques are $16,000, a deposit of $7,000 was in transit at month end, and a cheque for $800 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is
A)$40,800.
B)$40,000.
C)$24,800.
D)$20,100.

Accepted Answer

The answer of If the month-end bank statement shows a...

Question 10

Accounts receivable analysis and securitization Discuss why adjustments might have to be made and caution has to be exercised when analysing accounts receivable due to the increased use of securitization transactions.

Accepted Answer

The answer of Accounts receivable analysis and securitization Discuss why...

Question 11

Accounts receivable assigned Prepare journal entries for Tanzania Inc for: Cash and Receivables 7 - 33
a)Accounts receivable of $700,000 that were originally recorded using the gross method were
assigned to Chad Finance Co.by Tanzania as security for a loan of $580,000.Chad charged
a 4% commission on the value of the accounts receivable; the interest rate on the note is
11%.
b)During the first month, Tanzania collected $300,000 on assigned accounts after deducting
$1,500 of sales discounts.As well, Tanzania wrote off a $1,100 assigned account as a bad
debt.
c)Tanzania paid Chad the amount collected plus one month's interest on the note.

Accepted Answer

The answer of Accounts receivable assigned Prepare journal entries for...

Question 12

Sudan Ltd.'s allowance for doubtful accounts was $85,000 at the end of 2013 and $105,000 at the end of 2012.For the year ended December 31, 2013, Sudan reported bad debt expense of $18,000 in its income statement.What amount did Sudan debit to allowance for doubtful accounts during 2013 to write off actual bad debts?
A)$38,000
B)$34,650
C)$20,000
D)$12,000

Accepted Answer

Allowance for doubtful accounts increased by $20,000 ($105,000 - $85,000). This increase is due to two factors: bad debt expense of $18,000 and write-offs of actual bad debts. The write-offs of actual bad debts must have been $20,000 - $18,000 = $2,000.

Question 13

Companies that carry inventories must carefully monitor inventory in order to
A)have the greatest selection available so customers can always find what they want.
B)minimize carrying costs and keep inventory levels high so stockouts never occur.
C)keep inventory levels high to maximize profits.
D)minimize carrying costs and meet customer demands.

Accepted Answer

Companies carrying inventories must balance the costs of carrying inventory with the need to meet customer demand. This means that they must carefully monitor inventory levels to minimize carrying costs while also ensuring that they always have enough inventory on hand to satisfy customer demand. This helps companies to maximize profits and avoid losses due to stockouts. Option A is not viable as having a high level of inventory is not possible for all companies, and it may increase the costs of inventory. Option B is not viable as it is not possible to carry inventory levels high all the time, and it may also increase inventory costs. Option C is not viable as having a high level of inventory does not guarantee maximization of profits.

Question 14

For the year ended December 31, 2013, Tunisia Corp.estimated its allowance for doubtful accounts using the year-end aging of accounts receivable.Additional information for calendar 2013 follows:  For the year ended December 31, 2013, Tunisia's bad debt expense should be
A)$37,000.
B)$52,000.
C)$89,000.
D)$126,000.

Accepted Answer

The answer of For the year ended December 31, 2013,...

Question 15

Factoring accounts receivable On April 1, Morocco Ltd.factored $500,000 of accounts receivable with Kenya Finance Corp.on a without recourse basis.Under the arrangement, Morocco was to handle disputes concerning service, and Kenya Finance was to make the collections, handle the sales discounts, and absorb the credit losses.Kenya Finance assessed a finance charge of 5% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts. Instructions
a)Prepare the journal entry required on Morocco's books on April 1.
b)Prepare the journal entry required on Kenya Finance's books on April 1.
c)Instead, assume Morocco factors the $500,000 of accounts receivable with Kenya Finance
on a with recourse basis.The recourse provision has a fair value of $12,000.Prepare the
journal entry required on Morocco's books on April 1.

Accepted Answer

The answer of Factoring accounts receivable On April 1, Morocco...

Question 16

On Egypt Corp.'s December 31, 2013 statement of financial position, the current receivables consisted of the following:  At December 31, 2013, the correct total of Egypt's current net receivables was
A)$78,000.
B)$74,500.
C)$70,500.
D)$66,500.

Accepted Answer

The answer of On Egypt Corp.'s December 31, 2013 statement...

Question 17

In preparing its August 31 bank reconciliation, Ghana Corp.has the following information available:  Ghana's correct cash balance at August 31 is
A)$31,440.
B)$32,090
C)$32,140.
D)$32,190.

Accepted Answer

The answer of In preparing its August 31 bank reconciliation,...

Question 18

Accounts receivable assigned Moonbeam Ltd.assigned $520,000 of their accounts receivable to the Sunbright Finance Company, as security for a loan of $430,000.Sunbright charged a 3.5% commission on the face amount of the loan, and the note bears interest at 9%. During the first month, Moonbeam collected $260,000 on assigned accounts.This amount was paid to the finance company along with one month's interest on the note. Instructions Prepare the required journal entries on Moonbeam's books related to the transfer of the accounts receivable, the loan, and the payment to the finance company.

Accepted Answer

The answer of Accounts receivable assigned Moonbeam Ltd.assigned $520,000 of...

Question 19

Amortization of discount under the straight-line and effective interest methods On January 1, 2013, Ethiopia Corporation receives a four-year, $50,000 zero-interest bearing note in payment of goods sold.The present value of the note equals the agreed upon sales price of $32,936.55.Ethiopia is a privately held company and follows ASPE. Instructions
a)Assuming Ethiopia uses the straight-line method to amortize the note's discount, prepare the
journal entry to record the sale on January 1, and the interest accrual on December 31, 2013.
b)Assuming Ethiopia uses the effective interest method to amortize the note's discount,
prepare the journal entry to record the sale on January 1, and the interest accrual on
December 31, 2013.

Accepted Answer

The answer of Amortization of discount under the straight-line and...

Question 20

In preparing its bank reconciliation at April 30, 2013, Ritz Inc.has the following information available:  The correct balance of cash at April 30, 2013 is
A)$46,680.
B)$51,280.
Cash and Receivables 7 - 19
C)$51,300.
D)$51,685.

Accepted Answer

The answer of In preparing its bank reconciliation at April...

Quiz 1: Intermediate Accounting Volume 1

The cost of goods available for sale is calculated as

The following accounts were included on Mali Co.'s unadjusted trial balance at December 31, 2013: Mali estimates that 1.5 % of the gross accounts receivable will become uncollectible.After the proper adjustment at December 31, 2013, the allowance for doubtful accounts should have a credit balance of

Lebanon Ltd.prepared an aging of its accounts receivable at December 31, 2013 and determined that the net realizable value of the receivables was $290,000.Additional information for calendar 2013 follows: For the year ended December 31, 2013, Lebanon's bad debt expense should be

A hardware retailer typically maintains the following inventory account(s) :

Entries for bad debt expense Angola Corp.'s unadjusted trial balance included the following: Instructions Prepare adjusting journal entries assuming that the estimate of uncollectibles is determined by using a)4% of gross accounts receivable and b)1.5% of net sales.

A manufacturing company typically maintains the following inventory account(s) :

If the month-end bank statement shows a balance of $49,000, outstanding cheques are $16,000, a deposit of $7,000 was in transit at month end, and a cheque for $800 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Accounts receivable analysis and securitization Discuss why adjustments might have to be made and caution has to be exercised when analysing accounts receivable due to the increased use of securitization transactions.

Companies that carry inventories must carefully monitor inventory in order to

For the year ended December 31, 2013, Tunisia Corp.estimated its allowance for doubtful accounts using the year-end aging of accounts receivable.Additional information for calendar 2013 follows: For the year ended December 31, 2013, Tunisia's bad debt expense should be

On Egypt Corp.'s December 31, 2013 statement of financial position, the current receivables consisted of the following: At December 31, 2013, the correct total of Egypt's current net receivables was

In preparing its August 31 bank reconciliation, Ghana Corp.has the following information available: Ghana's correct cash balance at August 31 is

In preparing its bank reconciliation at April 30, 2013, Ritz Inc.has the following information available: The correct balance of cash at April 30, 2013 is