ACC 225 ACC225 Module 4 Check Your Understanding Answers (AAU Online)
ACC 225 Module 4 Check Your Understanding (AAU Online)
1.What is the definition of investing activities?
2.The entry required to record a sales return by a customer would consist of:
3.Clancy Company sold $12,000 of merchandise to Lee Jones, with terms 2/10, n/30. If Lee paid for one-third of the merchandise within the discount period and two-thirds after the discount period, he paid a total of:
4.David Company had the following account balances: sales revenue, $300,000; sales returns and allowances, $6,000; sales discounts, $7,200; and bad debts, $1,200. Given these balances, the amount of net sales is:
5.Brighton Company uses the allowance method to estimate losses from uncollectable accounts. Net sales for the year are $960,000 and the company estimates its bad debts as 1 percent of net sales. If there is already a
$4,800 credit balance in allowance for bad debts, how much should be recorded as bad debt expense?
6.Loughlin Company uses the allowance method to estimate losses from uncollectible accounts. Net sales for the year are $960,000. The accounts receivable balance at year-end is $240,000 and the company estimates its bad
debts as 1 percent of accounts receivable. If there is already an $800 credit balance in allowance for uncollectible accounts, how much should be recorded as uncollectible accounts expense?
7.Explain the process and activities involved in the periodic inventory method.
8.A firm using the periodic inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a credit to:
9.A firm using the periodic inventory method purchased $8,000 of inventory on terms 1/10, n/30. The journal entry to record this transaction would include a debit to:
10.If a firm’s beginning inventory is $140,000, goods purchased during the period cost $520,000, and the cost of goods sold is $600,000, what is the ending inventory?
11.If cost of goods sold is $60,000 and the ending inventory balance is $30,000, what is the cost of goods available for sale?
12.Which inventory cost flow assumption would result in ending inventory being comprised of the most recently purchased goods? Explain the process involved.
13.Which inventory management ratio tells how long inventory is in stock?
14.What is the effect of an error in the inventory count?
15.What is the difference between a perpetual and a periodic system in terms of journal entries?
16.Exercise 6-25 “Recording Sales Transactions” (p. 249) - On June 24, 2012, Sudweeks Company sold merchandise to Brooke Bowman for $70,000 with terms 2/10, n/30. On June 30, Bowman paid $39,200 on her account and was allowed a discount for the timely payment. On July 20, Bowman paid $21,000 on her account and returned $9,000 of merchandise, claiming that it did not meet contract terms. Record the necessary journal entries for Sudweeks Company on June 24, June 30, and July 20
17.Exercise 7-4 “Computing Cost of Goods Sold” (p. 308)
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