Week 3 Homework Multiple choice (5 pts each) (highlight or clearly mark your answer) 1) A liability that has a remote possibility of becoming an actual loss is not included in a note to the financial statements is what? a) contingent b) current c) accrued d) long term 2) Which of the following amounts will differ if a company, using the last-in, first-out (LIFO) method, shifts from a periodic inventory system to a perpetual inventory system? a) ending merchandise inventory b) sales revenue c) purchases d) purchase returns 3) The Allowance for Bad Debts account has a debit balance of $6,000 before the adjusting entry for bad debt expense. After analyzing the accounts in the accounts receivable subsidiary ledger, the company's management estimates that uncollectible accounts will be $10,000. What will be the amount of the adjustment in the Allowance for Bad Debts account? a) $15,250 b) $10,000 c) $14,900 d) $16,000 4) A company has net credit sales of $1,012,500, beginning net accounts receivable of $250,000 and ending net accounts receivable of $200,000. What is the days' sales in accounts receivable? (Round to nearest whole day.) a) 81 days b) 99 days c) 93 days d) 90 days 5) A business purchased merchandise for 12,000 on account; terms are 2/10, n/30. If 2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be: a) 240. b) 200. c) 1,200. d) 1,000. e) 3,600. 6) Under what terms does the title to the merchandise pass to the purchaser when the goods are received by the purchaser a) Bill of lading b) FOB Point c) FOB origin d) FOB destination Problems (10 pts each) (please show your work for partial credit) 1. Golden Oak Antique Shop had the following account balances at the end of the current accounting period: Beginning inventory $73,000 Net purchases 58,250 Net sales revenue 87,500 The normal gross profit for the company is $45%. What was the company's estimated cost of goods sold for the accounting period? 2. Samson Company had the following balances and transactions during 2014: Beginning Merchandise Inventory 10 units at $95 March 10 Sold 8 units June 10 Purchased 20 units at $100 October 30 Sold 15 units What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2014 balance sheet as per the periodic first-in, first-out (FIFO) costing method? 3. The COGS for the month was $150,000. The beginning inventory was $50,000. The ending inventory was $75,000. What is the Inventory Turnover Ratio for the month. 4. The Allowance for Bad Debts account has a credit balance of $2,000. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. What will be the amount of Bad Debts Expense reported on the income statement for 2015? 5. Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for United Way. Provide the Provide the journal entry to record salaries expense and payroll withholdings. (Assume a FICAOASDI Tax of 4.2% and FICAMedicare Tax of 1.45%.) 6. A $35,000, two-month, 7% note payable was issued on December 1, 2015. What is the amount of interest expense recorded in the year 2016? 7. The following information is needed to reconcile the cash balance for Fire Steel Inc. A deposit of $5,800 is in transit. Outstanding checks total $1,500. The book balance is $6,800 at February 28, 2013. The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent. The bank balance at February 28, 2013 was $18,000. A deposit of $400 was credited by the bank for $4,000. A customer's check for $3,700 was returned for nonsufficient funds. The bank service charge is $60. Based on this information, prepare a bank reconciliation for Fire Steel Inc. as of February 28, 2013. Answer: Bank Book Balance, February 28, 2013 Balance, February 28,2013 Adjusted balance Feb. 28, 2013 Adjusted balance Feb. 28, 2013