accounting test 2 Flashcards
Elfland Toys purchased $164,800 worth of Pega Block toys on account with credit terms 60.2/10, n/60.
debit: merchandise inventory 164,800
credit: accounts payable-Eland Toys 164,800
Toys and More returned $11,250 of the merchandise to MegoBlock due to damage during shipment.
debit: accounts payable- Toys and More 11250
credit: merchandise inventory 11250
Toys and More paid the amount due, less the return and discount.
- purchased $113,300
- returned $11,250
debit: Accounts Payable- Toys and More. 102050
credit: Cash 100009
credit: merchandise inventory 2041
Burlington paid a $ 50 freight charge
debit: merchandise inventory 50
credit: cash 50
Oct. 10: Piranha.comPiranha.com sells 3,500 books on account for $17 each on October 10 to The Textbook Store. Record the transaction on the books of The Textbook Store
debit: merchandise inventory 59500
credit: accounts payable 59500
Several books were slightly damaged in shipment, so Piranha.com granted a sales allowance of $1,000 to The Textbook Store. Record the transaction on the books of The Textbook Store.
debit: accounts payable- piranha.com 1000
credit: merchandise inventory 1000
gross profit percentage
Gross Profit (net sales revenue-cost of goods sold)/ net sales revenue
Paid freight charges, $ 400
debit: merchandise inventory 400
credit: cash 400
Returned $ 600 of inventory to Sanders
debit: accounts payable- sanders 600
credit: merchandise inventory 600
Paid Sanders Diamonds, less return
debit: accounts payable
credit: merchandise inventory
Purchased inventory of $3,500 on account from SouthboroDiamonds, a jewelry importer. Terms were 22/10, n/EOM, FOB destination
debit: merchandise inventory
credit: accounts payable- southboro diamonds
Received a $ 300 allowance from Southboro Diamonds for damaged but usable goods
debit: accounts payable- southboro diamonds 300
credit: merchandise inventory 300
Paid Southboro Diamonds, less allowance and discount
debit: accounts payable
credit: merchandise inventory
credit: cash
merchandise inventory is a…
is a current asset
Cost of Goods sold is a..
expense, debit increases it
gross profit
net revenue- cost of goods sold
Jan. 4: Sold $16,000 of antiques on account, credit terms are n/30, to Cavalli Designs. Cost of goods is $8,000.
Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale.
debit: accounts receivable- Cavailli Designs 16000
credit; sales revenue- 16000
Now journalize the expense related to the January 4 sale long —Cost of goods, $8,000.
debit: cost of goods sold- 8000
credit: merchandise inventory- 8000
Jan. 8: Received a $ 300 sales return on damaged goods from Cavalli Designs. Cost of goods damaged is $ 150
Start by preparing the entry to record the sales return and decrease the receivable. Do not update the Merchandise Inventory with this entry. We will do that in the following step.
debit: refunds payable. 300
credit: accounts receivable- Cavalli Designs 300
Now prepare the entry to update the Merchandise Inventory account for the cost of the returned merchandise —cost of goods returned, $150
debit: merchandise inventory 150
credit: estimated returns inventory 150
Antique Mall paid $ 70 on freight out to White Furniture.
debit: delivery expense 70
credit: cash 70
in fifo when do you subtracted the amount from the top inventory
when its cost of goods sold
in fifo what do we do for the totals
add them all together
FIFO rules
- keep the first one and keep substring it from cost of goods sold and keep it.
- if you add to purchases you continuing to add to inventory
- will change when you get a COGS
LIFO method rules
- add the last inventory to cost of goods sold then use requirements and subtract that from last inventory. then take that and subtract from the first inventory to put it in the inventory on hand.
- it will change when you get a COGS
weighted average cost method rules
- will take second purchases add the first inventory and total cost
- divide total cost by quantity to get the unit cost for inventory on hand
- keep subtracting inventory on hand by cost of goods sold to get new inventory on hand
- the inventory will change when you get new purchases
Begin by recording the entry to record the sale of the putters on account on the 6th
quantity- 20, unit cost-53, The sales price of each putter is $ 119
debit: accounts receivable 2380
credit:sales revenue 2380
Now record the cost of the putters sold on the 6th.
debit: COGS 1060
credit: merchandise inventory 1060
Journalize the purchase of the putters on account on the 8th
8th journal: quantity-30, unit cost-70, total cost-2100
debit: merchandise inventory 2100
credit: accounts payable 2100
Journalize the sale of the putters on account on the 17th
quantity- 30, unit cost-70, The sales price of each putter is $ 119
debit; Accounts receivable
credit: sales revenue
Journalize the cost of the putters sold on the 17th.
debit: COGS
credit; merchandise inventory
Journalize the sale of the putters on account on the 30th.
quantity- 20, unit cost- 70, The sales price of each putter is $ 119
debit: accounts receivable
credit: sales revenue
Journalize the cost of the putters sold on the 30th
debit: COGS
credit: merchandise inventory
inventory turnover rate
cost of goods sold/ average inventory rate
days sale inventory
365/average inventory rate
Begin with the EFT collection
debit: cash
credit: rent revenue
Journalize the entry to correct the error.
debit: salaries expense
credit: cash
Journalize the adjustment for the NSF check
debit: accounts receivable
credit; cash
Journalize the charge for printed checks
debit; bank expense
credit; cash
Journalize the service charges
debit: bank expense
credit: cash
Journalize the creation of the fund.
debit; petty cash
credit; cash
Journalize the replenishment of the fund
debit; expenses
cash short and over
credit; cash
Make the entry on JulyJuly 1 to increase the fund balance to $ 325$325.
debit: petty. (difference of when you created cash and new)
credit: cash
An imprest fund has ______ balance at all times, which equals the sum of _______ accounts receivable
cash in the bank cash in the fund deposits in transit
plus the ________ that support payments from the fund. The internal control feature of an imprest fund is that it _____ the amount of money for which the fund custodian is responsible.
the same, cash in the fund, total of tickets, clearly identify
Use the direct write-off method to journalize KnollKnoll’s write-off of the uncollectible receivables
At April 30 2024, Knoll accounts receivable totaled $23,000. During May, she earned revenue of $25,000 on account and collected $22,000 on account. She also wrote off uncollectible receivables of $2,500 on May 31, 2024
debit; bad debt expense 2500
credit; accounts receivable 2500
Noel sent a $ 750 check to Gate City Cycles Cycles. Start by journalizing the entry to reverse the earlier write-off.
debit accounts receivable
credit; bad debt expense
On June2024, Gate City Cycles wrote off Noel’s $750 account receivable. Journalize the entry
debit: bad debt expense
credit: accounts receivable
Now journalize the cash collection
debit: cash
credit: accounts receivable
Sales revenue on account, $276,000 (ignore Cost of Goods Sold).
debit; accounts receivable
credit: sales revenue
Write-offs of uncollectibles, 6100 for allowance method
debit: allowance for bad debts
credit: accounts receivable
Bad debts expense of $6,000 was recorded.
debit: bad debts expense
credit: allowance for bad debt
Journalize Spring’s Bad Debts Expense using the percent-of-sales method.
debit: bad debt expense
credit; allowance for bad debts
Assume Clark had an unadjusted$1,800 credit balance in Allowance for Bad Debts at December 31, 2024. Journalize Clark’s December 31,2024, adjustment to record bad debts expense using the percent-of-receivables method.
The Accounts Receivable balance for Clark, Inc. at December 31, 2023, was $26,000. During 2024, Clark earned revenue of $455,000 on account and collected $322,000 on account. Clark wrote off $5,700 receivables as uncollectible. Industry experience suggests that uncollectible accounts will amount to 4% of accounts receivable.
debits: bad debt expense 4332
credits:allowance for bad debts 4332
26000+455000-322000-5700=153300
153300*.04=6,132
6,132-1800=4332
Requirement 2. Assume ClarkClark had an unadjusted $1,600 debit balance in Allowance for Bad Debts at December, 2024. Journalize ClarkClark’s December 2024, adjustment to record bad debts expense using the percent-of-receivables method.
debits: bad debt expense 7732
credits: allowance for bad debts 7732
26000+455000-322000-5700= 153300
153300*.04= 6,132
1632+ 1,600= 7732
Journalize Worldwide’s entry to record bad debts expense for 2024 using the aging-of-receivables method.
allowance for bad debt: 1216
accounts receivable: 76000……3,000
estimated percent uncollectible: 4%…. 16%
debit: bad debt expense 2304
credit: allowance bad expense 2304
