1. Hansen Company uses the periodic inventory method and had the following inventory information available: Units Unit Cost Total Cost 1/1 Beginning Inventory 100 $3 $ 300 1/20 Purchase 500 $4 2,000 7/25 Purchase 100 $5 500 10/20 Purchase 300 $6 1,800 1,000 $4,600 A physical count of inventory on December 31 revealed that there were 375 units on hand. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is __? 2. Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? Select one: a. Bad Debts Expense 10,000 Allowance for Doubtful Accounts 10,000 b. Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000 c. Bad Debts Expense 8,000 Accounts Receivable 8,000 d. Bad Debts Expense 8,000 Accounts Receivable 8,000 3. The financial statements of the Melton Manufacturing Company reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? Select one: a. 52.1 b. 29.2 c. 21.9 d. 36.5 4. The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost. True False 5. The financial statements of the Belfry Manufacturing Company reports net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? Select one: a. 40 times b. 80 times c. 54.7 times d. 50 times 6. Assume Grammar Company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000, purchases of $75,000, and sales of $125,000. Grammar closes its records once a year on December 31. In the accounting records, the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was Select one: a. equal to $5,000. b. more than $5,000. c. less than $5,000. d. less than $5,000. 7. The factor which determines whether or not goods should be included in a physical count of inventory is Select one: a. physical possession. b. legal title. c. management's judgment. d. whether or not the purchase price has been paid. 8. Nilson Company gathered the following reconciling information in preparing its August bank reconciliation: Cash balance per books, 8/31 $7,000 Deposits in transit 300 Notes receivable and interest collected by bank 1,700 Bank charge for check printing 40 Outstanding checks 4,000 NSF check 340 The adjusted cash balance per books on August 31 is Select one: a. $8,320 b. $8,020 c. $4,620 d. $4,920 9. Merchandising companies that sell to retailers are known as Select one: a. brokers. b. corporations. c. wholesalers. d. service firms. 10. Alpha First Company just began business and made the following four inventory purchases in June: June 1 150 units $ 780 June 10 200 units 1,170 June 15 200 units 1,260 June 28 150 units 990 $4,200 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 Select one: a. $1,040.00 b. $1,072.50 c. $1,305.00 d. $1,320.00 11. At April 30, Kessler Company has the following bank information: Cash balance per bank $4,600 Outstanding checks $280 Deposits in transit $550 Credit memo for interest $10 Bank service charge $20 What is Kesslers adjusted cash balance on April 30? Select one: a. $4,860 b. $4,880 c. $4,330 d. $4,870 12. Financial information is presented below: Operating Expenses $ 45,000 Sales Returns and Allowances 13,000 Sales Discount 6,000 Sales 150,000 Cost of Goods Sold 67,000 The profit margin ratio would be Select one: a. .127 b. .132 c. .139 d. .145 13. ogan Industries had the following inventory transactions occur during 2010: Units Cost/unit Feb. 1, 2010 Purchase 18 $45 Mar. 14, 2010 Purchase 31 $47 May 1, 2010 Purchase 22 $49 The company sold 51 units at $63. Assuming that a periodic inventory system is used, what is the companys gross profit using FIFO? (rounded to whole dollars) Select one: a. $2,441 b. $2,365 c. $848 d. $772 14. Use the following information regarding Black Company and Red Company to answer the question Which amount is equal to Black Company's "days in inventory" for 2010 (to the closest decimal place)? Year Inventory Turnover Ratio Ending Inventory Black Company 2008 $26,340 2009 10.7 $29,890 2010 10.2 $30,100 Red Company 2008 $25,860 2009 8.8 $24,750 2010 9.5 $22,530 Select one: a. 35.8 days b. 34.1 days c. 82.5 days d. 29.5 days 15. M. Cornett is a corporation that sells breakfast cereal. Based on the accounts listed below, what are M. Cornetts total trade receivables? Income tax refund due $ 500 Advance due to the company from the company president 300 3-month note due from M. Cornetts main customer 2,000 Interest due this month on the above note 100 Due and unpaid from this months sales 3,000 Due and unpaid from last months sales 1,000 Select one: a. $4,000 b. $6,000 c. $5,000 d. $6,900 16. A company just began business and made the following four inventory purchases in June: June 1 150 units $ 825 June 10 200 units 1,120 June 15 200 units 1,140 June 28 150 units 885 $3,970 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is Select one: a. $1,418 b. $1,475 c. $1,425 d. $1,400 17. Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $500,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-in $15,000. Determine net purchases. 18. Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $500,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-in $15,000. Determine cost of goods purchased. 19. Under the periodic inventory system, acquisitions of merchandise are not recorded in the Merchandise Inventory account. Select one: True False