Louisiana State University, Shreveport

ACCT 701

Assessment 2

1)“Y” Company began the  accounting  period  with  $60,000  of  merchandise, and net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Y company is:

2. 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 be:

3. On a sales invoice, “2/10, n/30” means

If payment is made within 10 days there will be 2% discount on paid amount, other wise the full amount is due in 30 days.                    

4. The major difference between unclassified and classified income statement are:

5. Gross margin percentage is calculated by
6. Current liabilities are obligations that:
7. Dividing net credit sales or net sales by average net accounts receivable yields.
8. Which of the following statements is false?
9. Hunt company estimates uncollectible accounts using the percentage of receivable method and expects that 5 percent of outstanding receivables will be collectible for 2014. The balance is Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year end. The collectible accounts expense for 2014 will be :
10. Maxwell company sells goods and services gross of sales taxes. In other words, the sales taxes are included in the sales price. The sales tax rate is 6 percent. At the end of the current period, the Revenue account has a balance of

$265,000. The amount of sales tax payable is:

11. Profitability ratios are an important measure of a company’s operating success.
12. Market tests help investors and potential investors assess the relative

merits of the various stocks in the marketplace. These tests include:

13. The following data was abstracted from the 2014 December 31, balance sheet Andrews Company:

14. Benson Company shows the following data on its 2014 financial statements:

15. The following data were abstracted from the 2014 December 31, balance sheet of Andrews Company:

16. Benson Company shows the following data on its 2014 financial statements:

17. Benson Company shows the following data on its 2014 financial statements:

18. The following information applies to Benson Company for 2014: Stock market price, December 31,2014:
19. The working capital of a company is equal to:

20. The gross profit percentage decreased from 36.5% in 2014 to 24.8% in 2015. What is the trend in this change?

21. ABC Inc. was incorporated two years ago by issuing 1,000 shares of common stock at $200 and borrowing $30,000 from a bank on a long-term note. Last year, ABC reported net income of $10,000 and paid a cash dividend of $800. During the year, the company also borrowed an additional $7,600 from the bank. What was total assets on ABC's balance sheet at the end of the year last year?

22. Based on the information below and considering that this company paid $322,500 in cash to its suppliers during the year, what is the company's cost of goods sold for 2015?

23. FFS Clothing Store sells socks. During January 2014, its inventory records for one particular brand of socks were as follows:

24. ABC INC sells socks. During January 2016, its inventory records for one brand of its socks were as follow:

25. If ending inventory on the last day of the year is overstated by $14,000, what is the effect on net income for the current year? Assume a tax rate of 0%. Net income is overstated by $14,000
26. If at the end of 2016, ending inventory is overstated, the 2016 net income is overstated.

27. ABC Inc, sells socks. During February 2016, its inventory record for one brand of its socks were as follows:

28. Based on the information below and considering that this company paid

$213,500 in cash to its suppliers during the year, what is the company’s cost of goods sold for 2015. Assume that the only source of Accounts Receivable is the purchase of inventory on credit. $270,340

29. FFS Clothing sells socks. During January 2017, its inventory records for one particular brand of socks were as follows:

30. On 2015, January 1, Jackson Company purchased equipment for $400,000 and installation testing costs totaled $40,000. The equipment has one estimated useful life of 10 years and an estimated salvage value of $40,000. If Jackson uses the straight line depreciation method, the depreciation expense for 2015 is:

31. On July 1, 2015, Jackson Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Jackson uses the double- declining-balance method, the depreciation expense for 2015 would be:

32. Hatfield Company purchased a computer on January 1, 2013 for $10,000. The computer had an estimated salvage value of $3,000 and an estimated useful life of five years. At the beginning of 2015, the estimated salvage value changed to $1,000, and the computer is expected to have a remaining useful life of two years. Using the straight-line method, the depreciation expense for 2015 is:
33. To be classified as a plant asset, an asset must (mark all that apply).
34. Which answer is FALSE? In accounting for plant assets, accountants must:
35. The units-of-production depreciation formula is:
36. When a fully depreciated asset is still in use

37. A truck costing $45,000 and having an estimated salvage value of $4,500 and an original life of five years is exchanged for a new truck. The cash price of the new truck is

$57,000. A trade-in allowance of $22,500 is received for the old truck and the difference is paid in cash. The old truck has been depreciated for three years using the straight-line method. Assuming that the recorded at:

38. On January 1, 2015, a company bought a machine for $120,000. The machine has a useful life of 5 years and a salvage value of $20,000. The company used the double declining method of depreciation. What is depreciation for 2016?