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Exam 5: Accounting for Receivables and Inventory Cost Flow

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Question 41

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The percent of revenue method of determining uncollectible accounts expense is called the balance sheet approach.

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B) False

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Question 42

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Fairleigh Company sells home weather stations.Its beginning inventory was 50 units at $200 per unit.During the year,Fairleigh made two purchases of the station: first,a 150-unit purchase at $220 per unit,and then 100 units at $250 per unit.The ending inventory for the year was 125 units. Required: Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory,assuming that Fairleigh uses a)FIFO b)LIFO c)Weighted average

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Question 43

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On December 31,2012,Falls Company recognized the accrued interest revenue on a one-year note receivable dated October 1,2012.Show the effect of the accrual of interest on Falls' financial statements.

On November 1,2012,Hardin Company accepted a credit card as payment for $2,000 of services rendered to one of its customers.Assume the credit card fee of 3% is recorded on the date of the sale.Show the effect of the sale and credit card fee on Ulmer's financial statements.

A company's year-end adjusting entry to recognize uncollectible accounts expense will

Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.

What type of account is the Allowance for Doubtful Accounts?

One of the disadvantages of the specific identification inventory cost flow method is that it can allow managers of a business to manipulate the amount of income the business reports.

The entry required to recognize the uncollectible accounts expense for 2012 will

For Engle Company,the balance in Accounts Receivable at the beginning of the period was $800.During the period $3,200 of credit sales were made to customers.If the ending balance in Accounts Receivable amounted to $400,and uncollectible accounts of $200 were written off,the amount of cash inflow from customers that would appear in the operating section of the cash statement would be:

Explain how a company would calculate the amount of uncollectible accounts expense using the percentage of revenue method.

The net realizable value of Bay's accounts receivable as of December 31,2012 was

What amounts will Siebens report on its 2013 statement of cash flows?

Which of the following answers correctly describes the effect on Ruiz's financial statements of the collection of cash from the credit card company?

The following information is for Carmen Company for 2012: Beginning inventory,100 units @$25 Units purchased,200 units @ $28 During the year,Carmen sold 250 units for $45 each. Required: a)Calculate gross margin assuming Carmen uses: 1)FIFO; 2)LIFO b)Disregarding the effect of income taxes,what would be the dollar amount of difference in net income between FIFO and LIFO? c)Calculate the cash flow from operating activities assuming that Carmen uses 1)LIFO; 2)FIFO.Assume that all transactions during the year were for cash.

The accounting principle that requires a company to use the same accounting methods (such as inventory cost flow methods) over a period of time is

Which of the following is not an advantage of accepting credit cards from retail customers?

The net realizable value of accounts receivable is calculated,

The adjusting entry to recognize uncollectible accounts expense does not affect the net realizable value of receivables.

Kendall Company uses the perpetual inventory method.On January 1,2012,Kendall purchased 300 units of inventory that cost $1.00 each.On January 10,2012,the company purchased an additional 400 units of inventory that cost $1.50 each.If Kendall uses the weighted average cost flow method and sells 400 units of inventory,the amount of cost of goods sold appearing on the income statement will be: