ACCT 101 TEST WITH 100% CORRECT
ANSWERS
A company's normal selling price for its product is $29 per unit. However, due to market
competition, the selling price has fallen to $24 per unit. This company's current
inventory consists of 110 units purchased at $25 per unit. Replacement cost has fallen
to $22 per unit. Calculate the value of this company's inventory at the lower of cost or
market. - Answer- $2,420.
110 units @ $22 per unit = $2,420
On December 31 of the current year, Plunkett Company reported an ending inventory
balance of $215,500. The following additional information is also available:
•
Plunkett sold and shipped goods costing $38,100 to Savannah Enterprises on
December 28 with shipping terms of FOB shipping point. The goods were not included
in the ending inventory amount of $215,500.
•
Plunkett purchased goods costing $44,100 on December 29. The goods were shipped
FOB destination and were received by Plunkett on January 2 of the following year. The
shipment was a rush order that was supposed to arrive by December 31. These goods
were included in the ending inventory balance of $215,500.
•
Plunkett's ending inventory balance of $215,500 included $15,100 of goods being held
on consignment from Carole Company. (Plunkett Company is the consignee.)
•
Plunkett's ending inventory balance of $215,500 did not include goods costing $95,100
th - Answer- $156,300
Start with beginning inventory of $215,500. The information in the first bullet point was
handled correctly. No adjustment is needed for that merchandise. For the second bullet
point, the $44,100 of goods should not have been included in ending inventory since the
goods were shipped FOB destination. Subtract $44,100. For the third bullet point,
ending inventory should not include goods held on consignment from another company.
Subtract $15,100. The information in the fourth bullet point was handled correctly. No
adjustment is needed. $215,500 - $44,100 - $15,100 = $156,300.
, If a company purchases equipment costing $4,300 on credit, the effect on the
accounting equation would be: - Answer- Assets increase $4,300 and liabilities increase
$4,300.
A company's inventory records report the following:
August 1 Beginning balance 27 units @ $17
August 5 Purchase 22 units @ $16
August 12 Purchase 26 units @ $17
On August 15, it sold 54 units. Using the FIFO perpetual inventory method, what is the
value of the inventory at August 15 after the sale? - Answer- $357
At the end of the day, the cash register tape shows $1,200 in cash sales but the count
of cash in the register is $1,260. The proper entry to account for this excess is: -
Answer- Debit Cash $1,260; credit Sales $1,200; credit Cash Over and Short $60.
Ralph Pine Consulting received its telephone bill in the amount of $380, and
immediately paid it. Pine's general journal entry to record this transaction will include a -
Answer- Debit to Telephone Expenses for $380.
On April 1, Santa Fe, Inc. paid Griffith Publishing Company $2,628 for a 36-month
subscriptions to several different magazines. Santa Fe debited the prepayment to a
Prepaid Subscriptions account, and the subscriptions started immediately. What amount
should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments
on December 31 of the first year assuming the company is using a calendar reporting
period and no previous adjustment has been made? - Answer- $1,971.
$2,628/36 = $73 per month
Wildlife Wholesale Supply sold birdseed to a retailer for $2,760, receiving cash at the
time of sale.The cost of the birdseed was $2,270. When recording the collection from
the customer, in its cash receipts journal, Wildlife would enter: - Answer- $2,760 in the
Cash Dr. column; $2,760 in the Sales Cr. column; and $2,270 in the Cost of Goods Sold
Dr./Inventory Cr. column.
A company earned $3,125 in net income for October. Its net sales for October were
$12,500. Its profit margin is: - Answer- 25%.
ANSWERS
A company's normal selling price for its product is $29 per unit. However, due to market
competition, the selling price has fallen to $24 per unit. This company's current
inventory consists of 110 units purchased at $25 per unit. Replacement cost has fallen
to $22 per unit. Calculate the value of this company's inventory at the lower of cost or
market. - Answer- $2,420.
110 units @ $22 per unit = $2,420
On December 31 of the current year, Plunkett Company reported an ending inventory
balance of $215,500. The following additional information is also available:
•
Plunkett sold and shipped goods costing $38,100 to Savannah Enterprises on
December 28 with shipping terms of FOB shipping point. The goods were not included
in the ending inventory amount of $215,500.
•
Plunkett purchased goods costing $44,100 on December 29. The goods were shipped
FOB destination and were received by Plunkett on January 2 of the following year. The
shipment was a rush order that was supposed to arrive by December 31. These goods
were included in the ending inventory balance of $215,500.
•
Plunkett's ending inventory balance of $215,500 included $15,100 of goods being held
on consignment from Carole Company. (Plunkett Company is the consignee.)
•
Plunkett's ending inventory balance of $215,500 did not include goods costing $95,100
th - Answer- $156,300
Start with beginning inventory of $215,500. The information in the first bullet point was
handled correctly. No adjustment is needed for that merchandise. For the second bullet
point, the $44,100 of goods should not have been included in ending inventory since the
goods were shipped FOB destination. Subtract $44,100. For the third bullet point,
ending inventory should not include goods held on consignment from another company.
Subtract $15,100. The information in the fourth bullet point was handled correctly. No
adjustment is needed. $215,500 - $44,100 - $15,100 = $156,300.
, If a company purchases equipment costing $4,300 on credit, the effect on the
accounting equation would be: - Answer- Assets increase $4,300 and liabilities increase
$4,300.
A company's inventory records report the following:
August 1 Beginning balance 27 units @ $17
August 5 Purchase 22 units @ $16
August 12 Purchase 26 units @ $17
On August 15, it sold 54 units. Using the FIFO perpetual inventory method, what is the
value of the inventory at August 15 after the sale? - Answer- $357
At the end of the day, the cash register tape shows $1,200 in cash sales but the count
of cash in the register is $1,260. The proper entry to account for this excess is: -
Answer- Debit Cash $1,260; credit Sales $1,200; credit Cash Over and Short $60.
Ralph Pine Consulting received its telephone bill in the amount of $380, and
immediately paid it. Pine's general journal entry to record this transaction will include a -
Answer- Debit to Telephone Expenses for $380.
On April 1, Santa Fe, Inc. paid Griffith Publishing Company $2,628 for a 36-month
subscriptions to several different magazines. Santa Fe debited the prepayment to a
Prepaid Subscriptions account, and the subscriptions started immediately. What amount
should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments
on December 31 of the first year assuming the company is using a calendar reporting
period and no previous adjustment has been made? - Answer- $1,971.
$2,628/36 = $73 per month
Wildlife Wholesale Supply sold birdseed to a retailer for $2,760, receiving cash at the
time of sale.The cost of the birdseed was $2,270. When recording the collection from
the customer, in its cash receipts journal, Wildlife would enter: - Answer- $2,760 in the
Cash Dr. column; $2,760 in the Sales Cr. column; and $2,270 in the Cost of Goods Sold
Dr./Inventory Cr. column.
A company earned $3,125 in net income for October. Its net sales for October were
$12,500. Its profit margin is: - Answer- 25%.
