7. Michael Jackson's Strings uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below:

Cost Retail

Beginning inventory $46,000 $63,000

Net purchases 154,000 215,000

Net markups 22,000

Net markdowns 35,000

Net sales 220,000

To the nearest thousand, estimated ending inventory using the conventional retail method is

A. $30,000.

B. $32,000.

C. $34,000.

D. $37,000.

8. Mario Brothers Company adopted the dollar-value LIFO inventory method on January 1, 2015. In applying the LIFO method, Mario Brothers uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:

Ending Inventory

At Current At Base

Year Cost Year Cost Cost Index

1/1/2015 $300,000 $300,000 1.00

12/31/2016 345,600 320,000 1.08

12/31/2017 420,000 350,000 1.20

Under the dollar-value LIFO method, the inventory at December 31, 2016, should be:

A. $351,600. D. $357,600.

B. $600,120. C. $350,000.

9. Thatch Fencing Company sold $46,000 of fencing to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Thatch uses the gross method of accounting for cash discounts.

What entry would Thatch make on April 12?

A.

Accounts receivable 45,540

Sales 45,540

B.

Accounts receivable 46,000

Sales 46,000

C.

Accounts receivable 46,000

Sales 45,540

Sales discounts 460

D.

Accounts receivable 45,540

Sales discounts 460

Sales 46,0004

10. Lingua Company reported the following pretax data for its first year of operations.

Net sales 7,340

Cost of goods available for sale 5,790

Operating expenses 1,728

Effective tax rate 40%

Ending inventories:

If LIFO is elected 618

If FIFO is elected 798

What's Lingua's net income if it elects LIFO?

A. $264

B. $440

C. $620

D. $372

11. When using the gross profit method to estimate ending inventory, it's not necessary to know

A. net purchases.

B. beginning inventory.

C. net sales.

D. cost of goods sold.

12. Tannis Design began 2015 with accounts receivable of $115,000. All sales are made on credit. Sales and cash collections from customers for the year were $780,000 and $700,000, respectively. Cost of goods sold for the year was $450,000. What was Tannis's receivables turnover ratio (rounded) for 2015?

A. 4.00

B. 2.90

C. 6.78

D. 5.03

13. San Juan Company had the following account balances at December 31, 2015, before recording bad debt expense for the year:

Accounts receivable $1,400,000

Allowance for uncollectible accounts (credit balance) 22,000

Credit sales for 2015 1,950,000

San Juan is considering the following approaches for estimating bad debts for 2015:

Based on 3% of credit sales

Based on 6% of year-end accounts receivable

What amount should San Juan charge to bad debt expense at the end of 2015 under each method?

A. Percentage of credit sales: $58,500; percentage of accounts receivable: $62,000

B. Percentage of credit sales: $117,000; percentage of accounts receivable: $95,000

C. Percentage of credit sales: $58,500; percentage of accounts receivable: $84,000

D. Percentage of credit sales: $36,500; percentage of accounts receivable: $62,000