ACCT 2113 Study Guide - Midterm Guide: Contingent Liability, Intangible Asset, Matching Principle
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Use the following to answer questions 53-56:
The financial statements of Wines, Inc., provide the followinginformation for the current year:
Dec.31 | Jan.1 | |
Accountsreceivable...................................................................... | $210,000 | $180,000 |
Inventory...................................................................... | 200,000 | 190,000 |
Prepaidexpenses....................................................................... | 14,000 | 10,000 |
Accounts payable (formerchandise)................................................................. | 176,000 | 161,000 |
Accrued expensespayable......................................................................... | 13,000 | 19,000 |
Netsales.............................................................................. | 2,900,000 | |
Cost of goodssold............................................................................... | 1,500,000 | |
Operating expenses (including depreciation of$40,000)...................................................................................... | 300,000 |
53. Refer to the above data.Compute the amount of cash received from customers during thecurrent year.
A) $2,900,000.
B) $2,690,000.
C) $2,870,000.
D) Some other amount.
54. Refer to the above data.Compute the amount of Wine's cash payments for purchases ofmerchandise during the current year.
A) $1,500,000.
B) $1,495,000.
C) $1,505,000.
D) Some other amount.
55. Refer to the above data. Compute the amount of Wine's cash paymentsfor operating expenses.
A) $260,000.
B) $270,000.
C) $250,000.
D) Some other amount.
56. Refer to the above data.Wine's net cash flow from operating activities for the current yearis:
A) $1,105,000.
B) $1,375,000.
C) $1,495,000.
D) Some other amount.
57. Alpine Company reported anincrease of $190,000 in its accounts receivable during the year2005. The company's statement of cash flows for 2005 reported $1million of cash received from customers. What amount of net salesmust Alpine have recorded in 2005?
A) $ 810,000.
B) $1,190,000.
C) $1,000,000.
D) $ 190,000
58. When there is an allowancefor doubtful accounts in use, the writing-off of an uncollectibleaccounts receivable will:
A) Reduce income.
B) Reduce an expense.
C) Not change income nor total assets.
D) Increase total assets.
59. The aging of the accountsreceivable approach to estimating uncollectible accounts doesnot:
A) Take into consideration the existing balance in the Allowancefor Doubtful Accounts.
B) Utilize a percentage of probable uncollectibleaccounts for each age group of accounts receivable.
C) Stress the relationship between uncollectibleaccounts expense and net sales.
D) Tend to give a reliable estimate of uncollectible accountsbecause of the consideration given to the collectability ofspecific accounts receivable.
60. Juliet Inc. had accounts receivable of $300,000 and an allowancefor doubtful accounts of $18,500 just before writing off asworthless an account receivable from Arrow Company of $1,200. Thenet realizable values of the accounts receivable before and afterthe write-off were:
A) $281,500 before and $280,300 after.
B) $281,500 before and $281,500 after.
C) $300,000 before and $298,800 after.
D) $318,500 before and $317,300 after.
61. Romeo Inc. had accountsreceivable of $250,000 and an allowance for doubtful accounts of$9,700 just before writing off as worthless an account receivablefrom Juliet Company of $1,500. After writing off this receivablewhat would be the balance in Romeo's Allowance for DoubtfulAccounts?
A) $9,700 credit balance.
B) $10,900 credit balance.
C) $8,200 credit balance.
D) $8,200 debit balance.
62. Sandy Company uses thebalance sheet approach in estimating uncollectible accountsexpense. It has just completed an aging analysis of accountsreceivable at December 31, 2006. This analysis disclosed thefollowing information:
Age | Percentage | |
Group | Considered | |
Total | Uncollectible | |
Not yet due | $51,000 | 1% |
1-30 days past due | $29,000 | 2% |
31-60 past due | $12,000 | 8% |
What is the appropriate balance for Sandy's Allowance for DoubtfulAccounts at December 31, 2006?
A) $92,000.
B) 2% of credit sales in 2006.
C) $1,540.
D) $2,050.
63. At the start of the currentyear, Utopia Corporation had a credit balance in the Allowance forDoubtful Accounts of $1,400. During the year, a monthly provisionof 2% of sales was made for uncollectible accounts. Sales for theyear were $300,000, and $5,200 of accounts receivable were writtenoff as worthless. No recoveries of accounts previously written offwere made during the year. The year-end financial statements shouldshow:
A) Uncollectible accounts expense of $11,200.
B) Allowance for Doubtful Accounts with a creditbalance of $2,200.
C) Allowance for Doubtful Accounts with a creditbalance of $6,600.
D) Uncollectible accounts expense of $5,200.
