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

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 for the period 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 within the discount period, the purchase discount would be:

3.            One a sales invoice, 2/10, n30 means

4.            The major differences between unclassified and classified income statements are:

5.            Gross margin percentage is calculated by:

a.            None of these

b.            Gross margin minus non-operating expenses divided by Gross sales

c.             Gross margin divided by Net Inventory Turnover x 100

d.            Gross margin divided by net sales x 200

e.            Net cost of sales divided by net sales x 100

6.            Current liabilities are obligations that:

a.            Only (y) and (z) are true

b.            (y) Will typically be paid out of current assets

c.             (z) Are payable within one year or one operating cycle, whichever is shorter.

d.            (x) Are payable within one year or one operating cycle, whichever is longer.

e.            Only (x) and (y) are true.

7.            Dividing net credit sales, of net sales, by average net accounts receivable yields:

a.            Inventory turns

b.            Asset turnover

c.             Receivables aging

d.            Not a meaningful calculation since sales and receivables are both debits.

8.            Which of the following statements is false?

a.            The allowance for uncollectible accounts reduces accounts receivable to their net realizable value.

b.            A write-off of an account reduces the net amount shown for accounts receivable on

the balance sheet.

c.             The percentage-of-receivables method may use either an overall rate or a different rate for each age category.

d.            None of these.

e.            Any existing balance in the Allowance for uncollectible accounts is ignored in calculating the uncollectible accounts expense under the percentage-of-sales method except that the allowance account must have a credit balance after adjustment.

9.            Hunt Company estimates uncollectable accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2014. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year-end. The uncollectible accounts expense for 2014 will be: