3) The following transactions have been journalized and posted to the proper accounts.
1. Mark Call invested $7,000 cash in his new design services business.
2. The business paid the first month’s rent of $700.
3. The business purchased equipment by paying $2,000 cash and executing a note payable for $4,500.
4. The business purchased supplies for $850 cash.
5. The business billed a client for $4,000 of design services completed.
6. The business received $3,000 of the account for the completed services.
4) The following are the ending month’s balances for Toys Galore.
What is the net income for Toys Galore for September?
8) Hank’s Tax Planning Service has a beginning balance in the Supplies account of $800. During the current month, he purchased an additional $2,000 of supplies. At the end of the month, he had $250 of supplies left. The amount of supply expense to be recorded for the month is:
9) Revenues total $10,200. Expenses total $7,300. Withdrawals total $2,600. What is the balance in the Income summary account prior to closing Net income or loss to the Capital account?
A) Credit balance of $300
B) Debit balance of $2,900
C) Credit balance of $2,900
D) Balance of $0
12) On November 1, 2012, Everett Janitorial Supply sold merchandise for $5,000, FOB destination, 2/10, n/30. The merchandise cost $3,200. Everettpaid transportation costs of $100. On November 6, 2012, merchandise of $1,000 from the November 1 sale was returned. The returned merchandise had cost $600. Everettreceived payment for the balance of the sale on November 10, 2012. If this were the only sales transaction of the period, what amount of Net sales revenue would be shown on the income statement?
13) The Income summary account has a $25,000 credit balance after the revenue and expense accounts have been closed. To which account is this balance closed?
B) Sales revenue
C) Cost of goods sold
14) A company’s net sales revenue is $540,000. Its cost of goods sold is $360,000. Its gross profit percentage is:
15) Inventory turnover is 8.0. Calculate days in inventory.
16) A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the First-In, First-Out inventory costing method, what is the amount of ending inventory on December 31?
17) Which of the following assets must be reported at the lower-of-cost-or-market?
A) Accounts receivable
C) Prepaid insurance
18) The following data is available:
Net sales, first month
Normal gross profit
Using the gross profit method, the Estimated ending inventory balance would be:
19) Which of the following are clues that a company may have been “cooking the books” by fraudulently increasing their level of net sales?
A) Several shipping clerks checked into hospitals from lifting heavy boxes.
B) There was a very high level of returned goods shortly after year-end.
C) Several company warehouses reported burglaries.
D) There was a high level of inventory purchases in the following period.
21) Accounts receivable has a balance of $16,000 and the Allowance for uncollectible accounts has a credit balance of $1,700. What is Net accounts receivable before and after a $60 account receivable is written off?
A) $14,300 before and $14,240 after
B) $14,300 before and $14,300 after
C) $16,000 before and $15,940 after
D) $16,000 before and $16,000 after
22) What is the maturity value of a note?
A) The principal amount minus interest due
B) The principal amount plus interest due
C) The face amount of the note
D) The principal amount times the interest rate
23) Which of the following accounting methods is usually used to compute amortization expense?
D) First-In, First-Out
24) On September 1, 2012, Algernon Company sold a truck for $15,000 cash. The truck was originally purchased for $40,000, had an estimated salvage value of $4,000 and an estimated life of 6 years. Algernon had recorded depreciation of $30,000 through the end of 2011 using Straight-Line. First, Algernon had to update the depreciation prior to sale. Then Algernon recorded the sale transaction. What was the effect of that transaction on the net income of the company?
A) No gain or loss
B) Gain of $9,000
C) Gain of $15,000
D) Loss of $9,000
25) Which of the following is included in the denominator of the acid-test ratio?
A) All current liabilities except accounts payable
B) Total liabilities
C) Total current liabilities
D) Total current assets