1. McGregor Co allows customers to pay with credit cards. The credit card company charges McGregor...
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1. McGregor Co allows customers to pay with credit cards. The credit card company charges McGregor a 3% fee. When a customer uses a credit card to pay McGregor $200 for services provided, McGregor would: a. Debit cash for $200 b. Credit service revenue for $194 c. Debit service fee expense for $6 d. Credit service revenue for $206. 2. A company had the following sales transactions: a. Total debit card sales = $200,000 b. Total credit card sales = $400,000 c. Total cash sales - $800,000 d. Total check sales = $100,000 There is a 2% on all credit card transactions. Calculate total sales recorded for the year. 3. Shupe Inc. estimates uncollectible accounts based on the percentage of AR. What effect will recording the estimate (the expense) of uncollectible accounts have on each of the components of the accounting equation: A=L+SE. (increase, decrease, no effect). Circle the correct choice for each. Asset: Increase Decrease No Effect Liabilities: Increase Decrease No Effect S/E: Increase Decrease No Effect 4. At December 31, Gill Co reported AR of $238,000 and an allowance for uncollectible accounts of $600 (credit balance). An analysis of AR suggests that the allowance should be 3% of AR. Make ONLY the journal entry to bring the allowance to the correct level. 5. Which accounting principle does the direct write-off method violate? 6. The allowance for uncollectible accounts is: a. an expense b. a contra asset account c. a contra revenue account d. a liability account 7. Sandburg Veterinarian reports the following information for the year: $120,000 Net sales Average A/R Cash Collections on sales 100,000 Calculate Sandburg's receivables turnover ratio and average collection period. 20,000 8. Lail Inc accounts for bad debts using the allowance method. On June 1, Lail Inc wrote off Andrew Green's $2,500 account. Based on Lail's estimation, Mr. Green will never pay any portion of the balance in his account. What effect will this write-off have on Lail Inc's balance sheet at the time of the write-off? a. an increase to expense and a decrease to liabilities b. no effect assuming that the allowance account was at least $2,500. c. an increase to assets and an increase to expense d. a decrease to assets and a decrease to owners' equity $ 7,500 9. Los Angeles Depot owns the following assets at September 30": Cash in checking account Cash in savings account Cash in petty cash drawer 3,000 125 2,750 Cash refund expected from IRS Total of three checks dated September 30 One check dated December 1" 130 What amount should be reported as Cash on the September 30 balance sheet? TF 10. The term capitalize means to record an expenditure as an expense. 950 TF 11. Cash received from the sale of salvaged materials is added to the cost of the land. TF 12. Research and development costs are recorded as intangible assets on the balance sheet. TF 13. Goodwill is recorded as an intangible asset on the balance sheet only when an entire company is purchased. It is the excess of cost over the fair value of the net assets. TF 14. Book value is equal to the original cost of the asset less the total balance to date in accumulated depreciation. 15. David Inc. incurred the following costs associated with the purchase of a piece of land that it will use to build an office building: $500,000 Sale price of land Sale of salvaged material on land Demolition of old building on land Ground breaking ceremony refreshments Legal fees to lawyers for the deed 7,500 For what amount should David Inc. record the land? 20,000 10,000 1,500 16. Research and development costs should be: 1. Expensed in the period incurred 2. Expensed in the period they are determined to be unsuccessful 3. Deferred pending determination of success 4. Expensed if unsuccessful, capitalized if successful 17. Northern Lights purchased the entire business of Southern Brights, including all of its assets and liabilities for $700,000. Below is information about Southern Brights: Fair value of assets Fair value of liabilities What amount Goodwill should be recorded by Northern Lights? $800,000 $300,000 18. Western Wholesale Foods incurs several expenditures during the current fiscal year. Indicate how they should be recorded in their financial records: expensed (E) or capitalized and depreciated (C&D)? A. Salaries for repair technicians $155,000 B. Remodeling of executive offices $84,000 C.. Annual equipment maintenance costs $72,900 D. Replacement of production equipment for increased productivity $38,000 E. Addition of sprinkler system of Manufacturing facility $35,000 19. Steven's Co. purchased a delivery vehicle on January 1, 2017 for $46,000. They estimate that they will use the vehicle for 8 years or 250,000 miles and it will have an estimated salvage value of $5,000. Calculate the depreciation for 2018 (only) as follows: A. Straight Line B. Activity Based - assuming 31,000 miles were driven in 2018. 20. A truck that cost $15,000 and had $10,000 of accumulated depreciation was disposed of on January 1, 2017. Make the journal entries to record the following: A. Assume the truck was retired as having no value B. Assume the truck was sold for $7,500 cash. 21. XYZ Corporation reported net income of $2,700,000 for the year. The beginning total assets were $17,500,000 and the ending total assets were $19,000,000. Net sales for the year were $21,000,000. Calculate Asset turnover and Return on Assets. 1. McGregor Co allows customers to pay with credit cards. The credit card company charges McGregor a 3% fee. When a customer uses a credit card to pay McGregor $200 for services provided, McGregor would: a. Debit cash for $200 b. Credit service revenue for $194 c. Debit service fee expense for $6 d. Credit service revenue for $206. 2. A company had the following sales transactions: a. Total debit card sales = $200,000 b. Total credit card sales = $400,000 c. Total cash sales - $800,000 d. Total check sales = $100,000 There is a 2% on all credit card transactions. Calculate total sales recorded for the year. 3. Shupe Inc. estimates uncollectible accounts based on the percentage of AR. What effect will recording the estimate (the expense) of uncollectible accounts have on each of the components of the accounting equation: A=L+SE. (increase, decrease, no effect). Circle the correct choice for each. Asset: Increase Decrease No Effect Liabilities: Increase Decrease No Effect S/E: Increase Decrease No Effect 4. At December 31, Gill Co reported AR of $238,000 and an allowance for uncollectible accounts of $600 (credit balance). An analysis of AR suggests that the allowance should be 3% of AR. Make ONLY the journal entry to bring the allowance to the correct level. 5. Which accounting principle does the direct write-off method violate? 6. The allowance for uncollectible accounts is: a. an expense b. a contra asset account c. a contra revenue account d. a liability account 7. Sandburg Veterinarian reports the following information for the year: $120,000 Net sales Average A/R Cash Collections on sales 100,000 Calculate Sandburg's receivables turnover ratio and average collection period. 20,000 8. Lail Inc accounts for bad debts using the allowance method. On June 1, Lail Inc wrote off Andrew Green's $2,500 account. Based on Lail's estimation, Mr. Green will never pay any portion of the balance in his account. What effect will this write-off have on Lail Inc's balance sheet at the time of the write-off? a. an increase to expense and a decrease to liabilities b. no effect assuming that the allowance account was at least $2,500. c. an increase to assets and an increase to expense d. a decrease to assets and a decrease to owners' equity $ 7,500 9. Los Angeles Depot owns the following assets at September 30": Cash in checking account Cash in savings account Cash in petty cash drawer 3,000 125 2,750 Cash refund expected from IRS Total of three checks dated September 30 One check dated December 1" 130 What amount should be reported as Cash on the September 30 balance sheet? TF 10. The term capitalize means to record an expenditure as an expense. 950 TF 11. Cash received from the sale of salvaged materials is added to the cost of the land. TF 12. Research and development costs are recorded as intangible assets on the balance sheet. TF 13. Goodwill is recorded as an intangible asset on the balance sheet only when an entire company is purchased. It is the excess of cost over the fair value of the net assets. TF 14. Book value is equal to the original cost of the asset less the total balance to date in accumulated depreciation. 15. David Inc. incurred the following costs associated with the purchase of a piece of land that it will use to build an office building: $500,000 Sale price of land Sale of salvaged material on land Demolition of old building on land Ground breaking ceremony refreshments Legal fees to lawyers for the deed 7,500 For what amount should David Inc. record the land? 20,000 10,000 1,500 16. Research and development costs should be: 1. Expensed in the period incurred 2. Expensed in the period they are determined to be unsuccessful 3. Deferred pending determination of success 4. Expensed if unsuccessful, capitalized if successful 17. Northern Lights purchased the entire business of Southern Brights, including all of its assets and liabilities for $700,000. Below is information about Southern Brights: Fair value of assets Fair value of liabilities What amount Goodwill should be recorded by Northern Lights? $800,000 $300,000 18. Western Wholesale Foods incurs several expenditures during the current fiscal year. Indicate how they should be recorded in their financial records: expensed (E) or capitalized and depreciated (C&D)? A. Salaries for repair technicians $155,000 B. Remodeling of executive offices $84,000 C.. Annual equipment maintenance costs $72,900 D. Replacement of production equipment for increased productivity $38,000 E. Addition of sprinkler system of Manufacturing facility $35,000 19. Steven's Co. purchased a delivery vehicle on January 1, 2017 for $46,000. They estimate that they will use the vehicle for 8 years or 250,000 miles and it will have an estimated salvage value of $5,000. Calculate the depreciation for 2018 (only) as follows: A. Straight Line B. Activity Based - assuming 31,000 miles were driven in 2018. 20. A truck that cost $15,000 and had $10,000 of accumulated depreciation was disposed of on January 1, 2017. Make the journal entries to record the following: A. Assume the truck was retired as having no value B. Assume the truck was sold for $7,500 cash. 21. XYZ Corporation reported net income of $2,700,000 for the year. The beginning total assets were $17,500,000 and the ending total assets were $19,000,000. Net sales for the year were $21,000,000. Calculate Asset turnover and Return on Assets.
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1 Answer b Credit service revenue for 194 Notes Customer pay to McGregor Co 200 Credit Car company c... View the full answer
Related Book For
Principles Of Accounting Volume 1 Financial Accounting
ISBN: 9781593995942
1st Edition
Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, OpenStax
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