TEST BANK ACCOUNTING PRINCIPLES 12TH EDITION WEYGANDT ch02WeyAP 12e TB CE b

COMPREHENSIVE EXAMINATION B (CHAPTERS - 9) Points Approximate Minutes Multiple Choice 20 15 Computation of Net Purchases/Cost of Goods Sold 10 10 B - III Special Journals 10 10 B - IV Bank Reconciliation 15 10 B-V Periodic Inventories 12 10 B - VI Accounts Receivable 10 10 B - VII Petty Cash 10 B - VIII Notes Receivable 14 15 100 90 Problem Topic B-I B - II Checking Work 95 B- Test Bank for Accounting Principles, Twelfth Edition Problem B - I — Multiple Choice (20 points) Instructions: Designate the best answer for each of the following questions The cost of goods available for sale is allocated between: a beginning inventory and ending inventory b beginning inventory and cost of goods on hand c ending inventory and cost of goods sold d beginning inventory and cost of goods purchased The one characteristic that all entries recorded in a cash payments journal have in common is: a a credit to the cash account b a debit to the cash account c that they all represent purchases of merchandise d that they are all posted to the accounts payable subsidiary ledger A check correctly written and paid by the bank for $872 is incorrectly recorded on the company's books for $827 The appropriate adjustment on a bank reconciliation would be to: a add $45 to the bank's balance b deduct $872 from the book's balance c deduct $45 from the bank's balance d deduct $45 from the book's balance The Petty Cash account should be debited: a whenever an expense is paid from the fund b whenever the fund is replenished c when the fund is established d when the fund is liquidated The balance of a control account in the general ledger: a must always be zero b must equal the composite balance of individual accounts in a related subsidiary ledger c must equal the amount of total assets d is always greater than the composite balance of individual accounts in a related subsidiary ledger At March 31, Johnson Company has the following bank information: cash balance per bank $3,150; outstanding checks $185; deposits in transit $360; credit memo for interest $25; bank service charge $30 What is Johnson’s adjusted cash balance on March 31? a $3,350 b $3,335 c $2,990 d $3,325 Comprehensive Examination B B- A company just starting business purchased three inventory items at the following prices: first purchase $780; second purchase $750; third purchase $710 If two items were sold during the period and the company used the LIFO costing method, the gross profit for the period would be how much greater or less than if the FIFO costing method had been used? a Gross profit would be $30 greater b Gross profit would be $70 greater c Gross profit would be the same d Gross profit would be $70 less An error in the physical count of goods on hand at the end of the current period resulted in a $2,500 understatement of the ending inventory The effect of this error in the current period is to: a overstate gross profit b overstate net income c understate cost of goods available for sale d overstate cost of goods sold A 90-day note receivable dated May 31 has a maturity date of: a August 26 b August 27 c August 29 d August 28 10 Grayson Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories Historically, the company has had a 60% gross profit rate During September, net sales amounted to $160,000; the beginning inventory on September was $72,000; and the cost of goods purchased during September amounted to $44,000 The estimated cost of Grayson Company's inventory on September 30 is: a $52,000 b $96,000 c $40,000 d $64,000 B- Test Bank for Accounting Principles, Twelfth Edition Problem B - II — Computation of Net Purchases/Cost of Goods Sold (10 points) Hamilton Company uses a periodic inventory system and has the following account balances: Beginning Inventory $140,000, Ending Inventory $120,000, Freight-in $20,000, Purchases $680,000, Purchase Returns and Allowances $8,000, and Purchase Discounts $4,000 Instructions: Compute each of the following: Net purchases Cost of goods available for sale Cost of goods sold Comprehensive Examination B B- Problem B - III — Special Journals (10 points) Instructions: Robertson Company maintains four special journals and a general journal to record its transactions For each of the transactions listed below, place an (X) in the box which indicates the appropriate journal for recording that transaction Journal Code: S = Sales journal CR = Cash receipts journal CP = Cash payments journal P = One column purchases journal G = General journal S Mr Robertson invests cash in the business Purchased supplies on account Purchased equipment for cash Paid for supplies previously purchased on account Purchased merchandise inventory on account Purchased merchandise inventory on Purchased inventory on account Sold merchandise to customers on account Sold merchandise to customers for cash Received a check from a customer as payment on account Received a check from a customer as payment on account.Received a check from a customer as payment on account Recorded depreciation expense on equipment 10 Mr Robertson withdrew cash from the business for personal expenses CR Journals CP P G B- Test Bank for Accounting Principles, Twelfth Edition Problem B - IV — Bank Reconciliation (15 points) Jamison Company received a bank statement for the month of July 2017, which showed a balance per bank of $2,750 The company's Cash account in the general ledger showed a balance of $2,140 at July 31 Other information that may be relevant in preparing a bank reconciliation for July follows: The bank returned an NSF check from a customer for $255 The company recorded cash receipts of $405 on July 31 but this amount does not appear on the bank statement A payroll check correctly written and paid by the bank for $560 was incorrectly recorded in the cash payments journal for $650 Checks which were written in June but still had not been presented to the bank for payment at July 31 amounted to $125 The bank included a credit memorandum for $600, which represents a collection of a customer's note by the bank for the company; principal amount of the note was $450 and the remainder was interest The bank included a $15 debit memorandum for service charges for the month of July Checks written in July which have not been paid by the bank at July 31 amounted to $470 Instructions: Prepare a bank reconciliation for Jamison Company for July which reconciles the balance per books and the balance per bank to their adjusted correct balances Comprehensive Examination B Prepare the necessary adjusting entries for Jamison Company at July 31, 2017 B- B- Test Bank for Accounting Principles, Twelfth Edition Problem B - V — Periodic Inventories (12 points) Christoph Company uses the periodic inventory method and had the following inventory information available for the month of March Date 3/1 3/5 3/12 3/18 3/25 3/30 Transaction Beginning inventory Purchase No Sale No Purchase No Sale No Purchase No Units 100 200 150 200 250 100 Unit Cost $2 $3 $3.5 $4 A physical count of units on March 31 revealed that 200 units were on hand Instructions: Answer the following independent questions and show computations supporting your answers Assume that the company uses the average cost method What is the dollar value of the ending inventory on March 31? Assume that the company uses the LIFO inventory method What is the dollar value of the cost of goods sold during March? Assume that the company uses the FIFO inventory method The dollar value of the ending inventory on March 31 is: Comprehensive Examination B B- Problem B - VI — Accounts Receivable (10 points) Instructions: Owens Company uses the allowance method to account for uncollectible accounts Prepare the appropriate journal entries to record the following transactions during 2017 You may omit journal entry explanations April 20 The account of Steven Reynolds for $100 was deemed to be uncollectible and is written off as a bad debt Aug 14 Received a check for $100 from Steven Reynolds, whose account had previously been written off as uncollectible Dec 31 The balance of Accounts Receivable and Allowance for Doubtful Accounts at year end are $336,000 and $6,200, respectively It is estimated that bad debt will be 3% of accounts receivable Write the year-end adjusting entry: B- 10 Test Bank for Accounting Principles, Twelfth Edition Problem B - VII — Petty Cash (9 points) Instructions: Midland Medical Supplies Company uses an imprest petty cash system The fund was established on June with a balance of $200 The fund was replenished on June 30 when $38 and the following petty cash receipts were found in the petty cash box: Date Receipt Number June 11 16 23 For Postage Travel Expense Miscellaneous Expense Freight-out Miscellaneous Expense Amount $19 36 12 28 65 On June 30, Midland Medical Supplies Company decided to increase the amount of the petty cash fund to $250 Prepare the appropriate journal entries to record all the petty cash transactions You may omit journal entry explanations Comprehensive Examination B B- 11 Problem B - VIII — Notes Receivable (14 points) Instructions: Prepare journal entries to record the following events, rounding to the nearest dollar if necessary April Trane Company accepted a 4%, 6-month, $120,000 note dated April from Greenway Company for account balance due April 30 Trane accrued interest on the above note for the month of April Oct Collected Greenway Company note in full Assume interest was correctly accrued each month June Assume instead that the note is dishonored and that no interest has been accrued Greenway Company is expected to eventually pay the amount owed B- 12 Test Bank for Accounting Principles, Twelfth Edition Solutions — Comprehensive Examination B Problem B - I — Multiple Choice (20 points) c a d c b d b d c 10 a Problem B - II — Computation of Net Purchases/Cost of Goods Sold (10 points) (a) Net purchases: $680,000 – $8,000 – $4,000 = $668,000 (b) Cost of goods available for sale: $140,000 + $668,000 + $20,000 = $828,000 (c) Cost of goods sold: $828,000 – $120,000 = $708,000 Problem B - III — Special Journals (10 points) S Mr Robertson invests cash in the business CR Journals CP P X Purchased supplies on account X Purchased equipment for cash X Paid for supplies previously purchased on account Purchased merchandise inventory on account Purchased merchandise inventory on X Purchased inventory on account Sold merchandise to customers on account X X Sold merchandise to customers for cash X Received a check from a customer as payment on account Received a check from a customer as payment on account.Received a check from a customer as payment on account X Recorded depreciation expense on equipment 10 Mr Robertson withdrew cash from the business for personal expenses G X X Comprehensive Examination B B- 13 Problem B - IV — Bank Reconciliation (15 points) JAMISON COMPANY Bank Reconciliation July 31, 2017 Cash balance per bank statement Add: Deposit in transit Less: Outstanding checks—June Outstanding checks—July Adjusted cash balance per bank $2,750 405 3,155 $125 470 595 $2,560 Cash balance per books Add: Collection of note receivable and interest Error in recording a check $2,140 600 90 2,830 Less: NSF check Bank service charge Adjusted cash balance per books 255 15 Cash Notes Receivable Interest Revenue 600 Accounts Receivable Cash 255 Miscellaneous Expense Cash 15 Cash Salaries and Wages Expense 90 270 $2,560 450 150 255 15 90 Problem B - V — Periodic Inventories (12 points) Weighted average cost = ($200 + $600 + $700 + $400) ÷ 600 = $3.17 (rounded) Units available 600 Units sold 400 Ending inventory 200 × 3.17 = $634 Ending inventory 3/1 100 units × $2 = 3/5 100 units × $3 = Ending Inventory Ending inventory 3/30 Purchase 3/18 Purchase Ending Inventory 100 units × 100 units × $200 300 $500 $4 = $3.5 = Cost of goods sold Cost of goods available Less: Ending inventory Cost of goods sold $400 350 $750 $1,900 $500 $ 1,400 B- 14 Test Bank for Accounting Principles, Twelfth Edition Problem B - VI — Accounts Receivable (10 points) Apr 20 Allowance for Doubtful Accounts Accounts Receivable—Steven Reynolds 100 Accounts Receivable—Steven Reynolds Allowance for Doubtful Accounts Cash Accounts Receivable—Steven Reynolds 100 Dec 31 Bad Debt Expense Allowance for Doubtful Accounts [($168,000 × 3%) – $6,200] 3,880 Aug.14 100 100 100 100 3,880 Problem B - VII — Petty Cash (9 points) June Petty Cash Cash 200 June 30 Miscellaneous Expense Travel Expense Postage Expense Freight-Out Cash Over and Short Cash 77 36 19 28 June 30 Petty Cash Cash 50 200 162 50 Problem B - VIII — Notes Receivable (14 points) April April 30 Oct June Notes Receivable Accounts Receivable 120,000 Interest Receivable Interest Revenue 400 Cash Notes Receivable Interest Receivable 122,400 Accounts Receivable Notes Receivable Interest Revenue 122,400 120,000 400 120,000 2,400 120,000 2,400 ... equipment 10 Mr Robertson withdrew cash from the business for personal expenses CR Journals CP P G B- Test Bank for Accounting Principles, Twelfth Edition Problem B - IV — Bank Reconciliation... the book's balance c deduct $45 from the bank' s balance d deduct $45 from the book's balance The Petty Cash account should be debited: a whenever an expense is paid from the fund b whenever the... bank for $872 is incorrectly recorded on the company's books for $827 The appropriate adjustment on a bank reconciliation would be to: a add $45 to the bank' s balance b deduct $872 from the book's