D103 Intermediate Accounting I OA #2 – Supplementary Practice Set
1. Apple Enterprises, a reseller of heavy equipment, sold equipment to Pie Corp in exchange for an
$800,000 three-year non-interest-bearing note. The present value of the note is $750,000. How much
sales revenue should Apple recognize for this sale?
a. $0
b. $75,000
c. $750,000
d. $800,000
JE: Dr : Notes Receivables $800,000
CR : Sales Revenue $750,000
CR : Discount on Notes Receivable $50,000
2. Blueberry Inc. has $12,000 in one bank and a $2,000 overdraft in another bank. Trade receivables total
$20,000, fixed assets are $150,000, notes receivable (80% long-term) $200,000, and a petty cash fund
with $500 is in current use. Calculate total current assets.
a. $62,500
b. $70,500
c. $72,500
d. $370,000
JE: Adj entry: DR: Notes Receivable (long Term) $40,000
CR: Notes Receivable (Short Term) $40,000
(Add to other asset accounts)
3. Cherry Corp. has trade receivables of $200,000 at year-end. It expects to collect about 70% of these
receivables. If the allowance for doubtful accounts currently has a $22,000 credit balance, how much
bad debt expense should Cherry record?
a. $0
b. $22,000
c. $38,000
d. $82,000
JE: Adj Entry : DR : Bad Debt Expense $38,000
CR: Allowance for Doubtful Accounts $38,000
4. Derby Pie Company ended the year with $650,000 of A/R and the allowance for doubtful accounts
balance had a $20,000 credit balance. What should the ending Allowance for Doubtful accounts balance
be after bad debt is adjusted if 90% of the receivables are considered collectible?
a. $20,000
b. $45,000
c. $65,000
d. $85,000
JE: Adj Entry : DR : Bad Debt Expense $45,000
CR: Allowance for Doubtful Accounts $45,000
5. Empanada Enterprises ended the year with $450,000 of A/R and the allowance for doubtful accounts
balance had a $15,000 debit balance. How much bad debt expense should be recorded assuming 20%
of the receivables are expected to be uncollectible?
a. $0
b. $65,000
c. $90,000
d. $105,000
JE: Adj Entry : DR : Bad Debt Expense $105,000
CR: Allowance for Doubtful Accounts $105,000
, D103 Intermediate Accounting I OA #2 – Supplementary Practice Set
6. Flapper Pie Corp. began July with 1,000 pies in inventory that cost $5 each and bought another 1,000
pies for $6 each on July 18. At the end of the month 500 pies remain. Using the LIFO periodic inventory
method, how much cost of goods available for sale, ending inventory and cost of goods expense sold
should be reported for July?
a. $5,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
b. $6,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
c. $11,000 Cost of Goods Available for Sale; $2,500 Ending Inventory; $8,500 COGS
d. $11,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
JE: DR: COGS $11,0000
DR: Ending Inventory $2,500
CR: Beginning Inventory $5,000
CR: Purchases $6,000
7. Green Tomato Company uses FIFO and a periodic inventory. It started the month with 2,000 pies of
inventory that cost $4 each and bought 1,500 more for $5 each. A total of 3,200 pies were sold during
the month. How much cost of goods available for sale, ending inventory and cost of goods sold should
be reported for the month?
a. $15,500 Cost of Goods Available for Sale; $1,500 Ending Inventory; $14,000 COGS
b. $15,500 Cost of Goods Available for Sale; $14,000 Ending Inventory; $1,500 COGS
c. $18,000 Cost of Goods Available for Sale; $0 Ending Inventory; $2,000 COGS
d. $14,000 Cost of Goods Available for Sale; $1,500 Ending Inventory; $14,000 COGS
JE: DR: COGS $14,000
DR: Ending inventory $1,500
CR: Purchases $7,500 JE: DR: Purchases $7,500
CR: Inventory Beginning $8,000 CR: Accounts Payable $7,500
8. Huckelberry Corp. started the month with 500 units that cost $10 each. During the month it bought 2,000
more for $11 each and a physical count at month-end indicates 1,400 units remain. Using the moving
average cost, how much cost of goods available for sale, ending inventory and cost of goods sold
should be reported for the month?
a. $27,000 Cost of Goods Available for Sale; $15,000 Ending Inventory; $12,000 COGS
b. $27,000 Cost of Goods Available for Sale; $12,000 Ending Inventory; $15,000 COGS
c. $27,000 Cost of Goods Available for Sale; $11,880 Ending Inventory; $15,120 COGS
d. $27,000 Cost of Goods Available for Sale; $15,120 Ending Inventory; $11,880 COGS
JE: Dr: Inventory $22,000
Cr : Accounts Payable $22,000
DR : COGS $11,880
CR : Inventory $11,880
9. Incredible Pie Company reported inventory of $20,000 on its May 31 balance sheet based on a physical
count, and $30,000 cost of goods sold on its May income statement. The actual ending inventory was
stated in error; it should have been $24,000. Which statement is true?
a. Ending inventory was overstated and net income was understated.
b. Ending inventory was understated and net income was overstated.
c. Ending inventory was understated and net income was understated.
d. Ending inventory was overstated and net income was not affected.
JE: Dr: Inventory $4,000
CR: COGS $4,000
1. Apple Enterprises, a reseller of heavy equipment, sold equipment to Pie Corp in exchange for an
$800,000 three-year non-interest-bearing note. The present value of the note is $750,000. How much
sales revenue should Apple recognize for this sale?
a. $0
b. $75,000
c. $750,000
d. $800,000
JE: Dr : Notes Receivables $800,000
CR : Sales Revenue $750,000
CR : Discount on Notes Receivable $50,000
2. Blueberry Inc. has $12,000 in one bank and a $2,000 overdraft in another bank. Trade receivables total
$20,000, fixed assets are $150,000, notes receivable (80% long-term) $200,000, and a petty cash fund
with $500 is in current use. Calculate total current assets.
a. $62,500
b. $70,500
c. $72,500
d. $370,000
JE: Adj entry: DR: Notes Receivable (long Term) $40,000
CR: Notes Receivable (Short Term) $40,000
(Add to other asset accounts)
3. Cherry Corp. has trade receivables of $200,000 at year-end. It expects to collect about 70% of these
receivables. If the allowance for doubtful accounts currently has a $22,000 credit balance, how much
bad debt expense should Cherry record?
a. $0
b. $22,000
c. $38,000
d. $82,000
JE: Adj Entry : DR : Bad Debt Expense $38,000
CR: Allowance for Doubtful Accounts $38,000
4. Derby Pie Company ended the year with $650,000 of A/R and the allowance for doubtful accounts
balance had a $20,000 credit balance. What should the ending Allowance for Doubtful accounts balance
be after bad debt is adjusted if 90% of the receivables are considered collectible?
a. $20,000
b. $45,000
c. $65,000
d. $85,000
JE: Adj Entry : DR : Bad Debt Expense $45,000
CR: Allowance for Doubtful Accounts $45,000
5. Empanada Enterprises ended the year with $450,000 of A/R and the allowance for doubtful accounts
balance had a $15,000 debit balance. How much bad debt expense should be recorded assuming 20%
of the receivables are expected to be uncollectible?
a. $0
b. $65,000
c. $90,000
d. $105,000
JE: Adj Entry : DR : Bad Debt Expense $105,000
CR: Allowance for Doubtful Accounts $105,000
, D103 Intermediate Accounting I OA #2 – Supplementary Practice Set
6. Flapper Pie Corp. began July with 1,000 pies in inventory that cost $5 each and bought another 1,000
pies for $6 each on July 18. At the end of the month 500 pies remain. Using the LIFO periodic inventory
method, how much cost of goods available for sale, ending inventory and cost of goods expense sold
should be reported for July?
a. $5,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
b. $6,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
c. $11,000 Cost of Goods Available for Sale; $2,500 Ending Inventory; $8,500 COGS
d. $11,000 Cost of Goods Available for Sale; $8,500 Ending Inventory; $2,500 COGS
JE: DR: COGS $11,0000
DR: Ending Inventory $2,500
CR: Beginning Inventory $5,000
CR: Purchases $6,000
7. Green Tomato Company uses FIFO and a periodic inventory. It started the month with 2,000 pies of
inventory that cost $4 each and bought 1,500 more for $5 each. A total of 3,200 pies were sold during
the month. How much cost of goods available for sale, ending inventory and cost of goods sold should
be reported for the month?
a. $15,500 Cost of Goods Available for Sale; $1,500 Ending Inventory; $14,000 COGS
b. $15,500 Cost of Goods Available for Sale; $14,000 Ending Inventory; $1,500 COGS
c. $18,000 Cost of Goods Available for Sale; $0 Ending Inventory; $2,000 COGS
d. $14,000 Cost of Goods Available for Sale; $1,500 Ending Inventory; $14,000 COGS
JE: DR: COGS $14,000
DR: Ending inventory $1,500
CR: Purchases $7,500 JE: DR: Purchases $7,500
CR: Inventory Beginning $8,000 CR: Accounts Payable $7,500
8. Huckelberry Corp. started the month with 500 units that cost $10 each. During the month it bought 2,000
more for $11 each and a physical count at month-end indicates 1,400 units remain. Using the moving
average cost, how much cost of goods available for sale, ending inventory and cost of goods sold
should be reported for the month?
a. $27,000 Cost of Goods Available for Sale; $15,000 Ending Inventory; $12,000 COGS
b. $27,000 Cost of Goods Available for Sale; $12,000 Ending Inventory; $15,000 COGS
c. $27,000 Cost of Goods Available for Sale; $11,880 Ending Inventory; $15,120 COGS
d. $27,000 Cost of Goods Available for Sale; $15,120 Ending Inventory; $11,880 COGS
JE: Dr: Inventory $22,000
Cr : Accounts Payable $22,000
DR : COGS $11,880
CR : Inventory $11,880
9. Incredible Pie Company reported inventory of $20,000 on its May 31 balance sheet based on a physical
count, and $30,000 cost of goods sold on its May income statement. The actual ending inventory was
stated in error; it should have been $24,000. Which statement is true?
a. Ending inventory was overstated and net income was understated.
b. Ending inventory was understated and net income was overstated.
c. Ending inventory was understated and net income was understated.
d. Ending inventory was overstated and net income was not affected.
JE: Dr: Inventory $4,000
CR: COGS $4,000
