can you show the work on how they got the answers on the file i attached for account 2101

Principles of Accounting 1 Summer 2016 Midterm Exam 2 (120 minutes) Version A Name: (please print)_____________________________ 50 Multiple choice questions at 5.2 points each for total points available of 260. However, the maximum score is 250. Select the BEST answer. You are permitted to use a simple four-function calculator. This is a closed book, closed note, and closed neighbor exam. You are NOT permitted to have scratch paper. Turn in the exam and scantron with your name and exam version letter noted on both. You will be required to show a picture ID upon turning in your exam and scantron. Indicate your answer on a SCANTRON using a #2 pencil. Do not mark your SCANTRON until you have selected your FINAL answer. Eraser marks can confuse the SCANTRON grading machine. All adverse consequences of eraser marks and mismarks are your responsibility. 1. Destiny Inc. just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28 200 units 300 units 150 units 50 units $ 1,100 1,680 855 295 $3,930 A physical count of merchandise inventory on June 30 reveals that there are 220 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is a. b. c. d. $1,212. $1,100. $1,170. $1,262. 2. Inventory becomes part of cost of goods sold when a company a. b. c. d. pays for the inventory. purchases the inventory. sells the inventory. receives payment from the customer. 3. The following information was taken from Corey Company's cash budget for the month of April: Beginning cash balance Cash receipts Cash disbursements $38,000 42,000 49,000 If the company has a policy of maintaining end of the month cash balance of $35,000, the amount the company would have to borrow is a. b. c. d. $4,000. $3,000. $7,000. $0. 4. In the table below the information for four companies is provided. Company Martin Lewis Danforth Garner Industry Average Accounts Receivable turnover 14.8 13.3 10.4 14.5 13.0 Average collection period 24.7 27.4 35.1 25.2 28.1 Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations? a. b. c. d. Martin Lewis Danforth Garner 5. A credit sale of $3,000 is made on May 4th, terms 2/10, n/30. What amount is received as payment in full on May 12th? a. b. c. d $2,700 $2,940 $3,000 $3,150 6. A $400 petty cash fund has cash of $98 and receipts of $290. The journal entry to replenish the account would include a a. b. c. d. debit to Cash Over and Short for $12 credit to Petty Cash for $298. debit to Cash for $290. credit to Cash for $290. 7. At December 31, 2015 Mohling Company's inventory records indicated a balance of $580,000. Upon further investigation it was determined that this amount included the following: $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/15 terms FOB destination, but not due to be received until January 2nd $6,000 of goods received on consignment from Dollywood Company What is Mohling's correct ending inventory balance at December 31, 2015? a. b. c. d. $462,000 $594,000 $410,000 $484,000 8. Layton Industries recorded the following events involving a recent purchase of inventory: Received goods for $100,000, terms 3/15, n/30. Returned $5,000 of the shipment for credit. Paid the invoice within the discount period. Paid $1,000 freight on the shipment. As a result of these events, the company's inventory a. b. c. d. increased by $96,000. increased by $93,000. increased by $95,000. increased by $93,150. 9. Assets purchased for resale are recorded in which of the following accounts? a. b. c. d. Supplies Inventory Equipment More than one of these answer choices is correct. 10. Sales revenues are usually considered earned when a. b. c. d. cash is received from credit sales. an order is received. title to goods have been transferred from the seller to the buyer. adjusting entries are made. 11. Financial information is presented below: Operating expenses Sales revenue Cost of goods sold Gross profit would be a. b. c. d. $158,000. $ 89,000. $ 65,000. $ 13,000. $ 52,000 210,000 145,000 12. Jenn's Fountain Pens Inc. has the following inventory data: Sept. 1 8 17 25 Inventory Purchase Purchase Purchase 80 units @ $4.00 each 100 units @ $4.30 each 40 units @ $4.20 each 80 units @ $4.40 each A physical count of merchandise inventory on September 30 reveals that there are 100 units on hand; therefore, 200 units were sold. Cost of goods sold under LIFO is a. b. c. d. $834 $406 $421 $864 13. Financial information is presented below: Operating expenses Sales returns and allowances Sales discounts Sales revenue Cost of goods sold $ 35,000 12,000 4,000 140,000 85,000 The amount of net sales on the income statement would be a. b. c. d. $128,000. $125,000. $137,000. $124,000. 14. Cooper Company purchases a new delivery truck for $50,000. The sales taxes are $2,500. The logo of the company is painted on the side of the truck for $1,200. The truck's annual license is $150. What does Cooper record as the cost of the new truck? a. b. c. d. $53,700. $52,500. $51,200. $53,850. 15. Wilton sells softball equipment. On November 14, they shipped $3,000 worth of softball uniforms to Paola Middle School, terms 2/10, n/30 FOB shipping point. On November 20, Paola Middle School returned $300 of defective merchandise. No customer payments have been received by Wilton. What amount will be recognized as accounts receivable on the balance sheet as of November 30? a. b. c. d. $2,940 $2,646 $3,000 $2,700 16. At the beginning of the year, Panther Athletic had an inventory of $200,000. During the year, the company purchased goods costing $800,000. If Panther Athletic reported ending inventory of $400,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be a. b. c. d. $500,000 and 10% $700,000 and 30%. $600,000 and 40%. $700,000 and 60%. 17. An error in the physical count of goods on hand at the end of a period resulted in a $10,000 understatement of the ending inventory. The effect of this error in the current period is a. b. c. d. Cost of Goods Sold Understated Overstated Understated Overstated Net Income Understated Overstated Overstated Understated 18. The LIFO reserve is a. the difference between the value of the inventory under LIFO and the value under FIFO. b. an amount used to adjust inventory to the lower of cost or market. c. the difference between the value of the inventory under LIFO and the value under average cost. d. the amount used to adjust inventory to history cost. 19. The following information was available for Bowyer Company at December 31, 2015: beginning inventory $80,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's inventory turnover in 2015 was a. b. c. d. 16.0 times. 11.0 times. 12.6 times. 11.7 times. 20. Barlett Company gathered the following reconciling information in preparing its March bank reconciliation: Cash balance per bank, 3/31 Cash balance per books, 3/31 Deposits in transit Bank charge for check printing Outstanding checks NSF check $30,800 $20,840 900 120 12,000 1,020 The adjusted cash balance on March 31 is a. b. c. d. $19,860. $24,060. $19,700. $20,840. 21. A company purchased factory equipment on June 1, 2015, for $96,000. It is estimated that the equipment will have a $6,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015, is a. b. c. d. $8,500. $5,250. $4,400. $3,750. 22. Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: Product A B C Cost $57,000 40,000 80,000 Market $60,000 38,000 79,000 If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be a. b. c. d. $177,000. $179,000. $175,000. $174,000. 23. Krylliss Company lends Caskill Company $50,000 on June 1, accepting a one year, 6% interest note. Krylliss Company prepares financial statements on June 30. What adjusting entry should be made June 30th, before the financial statements can be prepared? a. Note Receivable Cash b. Accounts Receivable Interest Revenue c. Interest Receivable Interest Revenue d. Interest Receivable Interest Revenue 30,000 30,000 150 150 250 250 3,000 3,000 24. An asset was purchased for $100,000. It had an estimated salvage value of $25,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $20,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be a. b. c. d. $15,000. $10,625. $8,500. $12,500. 25. Hogan Industries sold 102 units at a selling price per unit of $63 in 2015. The company's cost of goods sold was $4,730 and operating expenses were $600. If Hogan Industries has a tax rate of 35%, what is the company's net income for 2015 (rounded to whole dollars)? a. b. c. d. $1,102 $1,096 $767 $712 26. In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to the current cost to purchase the inventory is the a. b. c. d. FIFO method. LIFO method. average-cost method. tax method. 27. All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except a. b. c. d. independent outside auditors must attest to the level of internal control. companies must develop sound internal controls over financial reporting. companies must continually assess the functionality of internal controls. independent outside auditors must eliminate redundant internal controls. 28. When a seller records a return of goods by a customer, the account the seller debits is a. b. c. d. Sales Revenue. Sales Returns and Allowances. Accounts Payable. Accounts Receivable. 29. Which of the following is not an internal control activity for cash? a. The number of persons who have access to cash should be limited. b. The functions of record keeping and maintaining custody of cash should be combined. c. Surprise audits of cash on hand should be made occasionally. d. All cash receipts should be recorded promptly. 30. All of the following are true regarding the management and monitoring of cash except a. companies may have plenty of sales, but insufficient cash to support operations. b. the cash to cash operating cycle for a merchandising company is generally shorter than that of a service company. c. manufacturers may experience a significant lag between the purchase of raw materials and the receipt of cash from customers. d. companies should have sufficient cash to meet payments but minimize the amount of non-revenue-generating cash on hand. 31. Cost allocation of an intangible asset is referred to as a. b. c. d. amortization. depreciation. accretion. capitalization. 32. Which of the following is a basic principle of cash management? a. b. c. d. Increase collection of receivables. Keep inventory levels low. Invest idle cash. All of the above are basic principles of cash management. 33. Notes or accounts receivables that result from sales transactions are often called a. b. c. d. sales receivables. non-trade receivables. trade receivables. merchandise receivables. 34. The expense recognition principle relates to uncollectible credit sales by stating that bad debt expense should be recorded a. b. c. d. in the same period as allowed for tax purposes. in the period of the sale. in a future period. in the period of the loss. 35. On July 27th, Doane Company receives a $7,000, 3-month, 6% promissory note from Ray Company in settlement of an open accounts receivable. What entry will Doane Company make upon receiving the note July 27th? a. Notes Receivable Accounts ReceivableRay Company b. Notes Receivable Accounts ReceivableRay Company Interest Revenue c. Notes Receivable Interest Receivable Accounts ReceivableRay Company Interest Revenue d. Notes Receivable Accounts ReceivableRay Company 7,035 7,035 7,105 7,000 105 7,000 105 7,000 105 7,000 7,000 36. On July 1, 2015, Dillman Kennels sells equipment for $67,000. The equipment was originally purchased January 1, 2012 at a cost of $180,000. The equipment had an estimated 5-year life and an expected salvage value of $30,000. Dillman Kennels uses the straight-line method of depreciation. The gain or loss on disposal is a. b. c. d. $4,000 gain. $8,000 loss. $9,000 loss. $6,000 gain. 37. A 90-day note dated June 29, 2014, would mature on: a. b. c. d. September 30, 2014. September 27, 2014. September 28, 2014. September 29, 2014. 38. The retailer (seller) considers Visa and MasterCard sales as a. b. c. d. cash sales. promissory sales. credit sales. contingent sales. 39. Selling accounts receivables to factors and allowing credit terms such as 2/10, n/30 a. b. c. d. represent common business practices. represent ways to accelerate receivables collections. result in collections that are less than the gross accounts receivable. All of these answer choices are correct. 40. A company purchased land for $325,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at a. b. c. d. $385,000. $350,000. $375,000. $410,000. 41. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a. b. c. d. Salvage value. Estimated useful life. Cash needed to replace the plant asset. Cost. 42. Mitchell Corporation bought equipment on January 1, 2014. The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the end of two years would be a. b. c. d. $180,000. $150,000. $130,000. $50,000. 43. Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds? a. b. c. d. An accounting policies manual. Tracing any debit memorandums from the bank to the company's records. The use of prenumbered checks. A review of the cash budget. 44. The lower of cost or market basis of valuing inventories is an example of a. b. c. d. assumption. periodicity. conservatism. persistency. 45. Roger Evans has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items. Which internal control principle, if any, is being violated? a. None, Roger has proven to be trustworthy and has enough experience to do a good job. b. Documentation procedures. c. Establishment of responsibilities. d. Segregation of duties. 46. The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions) Net income 2014 Net sales 2014 Total assets 12/31/13 Total assets 12/31/14 Nguyen Company $275 1,500 1,050 1,150 Northwest Corporation $390 4,100 3,000 4,000 What is Northwest's return on assets for 2014? a. b. c. d. 12.7% 11.4% 13.0% 11.1% 47. Intangible assets a. b. c. d. should be reported with Property, Plant, and Equipment. are not reported on the balance sheet because they lack physical substance. should be reported as Current Assets on the balance sheet. should be reported as a separate classification on the balance sheet. 48. Sarah's Pet Shop's beginning inventory was $80,000 and the ending inventory was $60,000. If the company's cost of goods sold for the year was $600,000, purchases would have been a. b. c. d. $580,000. $560,000. $620,000. $440,000 49. Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000. Management estimates that 4% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $4,000 before adjustment? a. Bad Debt Expense Allowance for Doubtful Accounts b. Bad Debt Expense Allowance for Doubtful Accounts c. Bad Debt Expense Accounts Receivable d. Bad Debt Expense Allowance for Doubtful Accounts 8,000 8,000 6,000 6,000 8,000 8,000 4,000 4,000 50. Which of the following is not one of the main factors that contribute to fraudulent activity? a. b. c. d. Opportunity. Length of operating cycle. Financial pressure. Rationalization