Question 23: In preparing its bank reconciliation for the month of April 2013, F

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Question 23: In preparing its bank reconciliation for the month of April 2013, Flip, Inc. has available the following information.

Balance per bank statement, 4/30/13                               $39,300

NSF check returned with 4/30/13 bank statement                 470

Deposits in transit, 4/30/13                                                  5,000

Outstanding checks, 4/30/13                                               5,200

Bank service charges for April                                                  30

What should be the adjusted cash balance at April 30, 2013?

a.   $38,630.

b.   $38,800.

c.   $39,010.

d.   $39,100.

Question 24: If a check correctly written and paid by the bank for $591 is incorrectly recorded on the companys books for $519, the appropriate treatment on the bank reconciliation would be to

a.   deduct $72 from the books balance.

b.   add $72 to the books balance.

c.   deduct $72 from the banks balance.

d.   deduct $591 from the books balance.

Acct220                                                                                                          Page 7 of 9

Question 25: Flip Company had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $180,000, and the end of the year it was $120,000. What was the accounts receivable turnover ratio?

a.   5.0

b.   6.7

c.   8.0

d.   10.0

Question 26: The financial statements of Flip Manufacturing Company report net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?

a.   40 days

b.   50 days

c.   54.7 days

d.   80 days

Question 27: Flip Company purchases a new delivery truck for $60,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Flip record as the cost of the new truck?

a.   $66,050

b.   $65,890

c.   $64,000

d.   $65,600

Question 28: A company purchased factory equipment on April 1, 2012 for $80,000. It is estimated that the equipment will have an $10,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2012 is

a.   $8,000.

b.   $7,000.

c.   $5,250.

d.   $6,000.

Question 29: Flip's Boutique has total receipts for the month of $30,660 including sales taxes. If the sales tax rate is 5%, what are Flip's sales for the month?

a.   $29,127

b.   $29,200

c.   $32,193

d.   It cannot be determined.

Explanation / Answer

Q. 24)

The correct answer is a. Deduct $ 72 from Books Balance

Q. 25)

The Correct answer is c. 8 Times

Average Accounts Receivable = Opening Balance + Closing Balance / 2

                                               = $ 180,000 +$ 120,000 / 2

                                               = $ 150,000

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivables

                                                         = $ 1,200,000 / $ 150,000

                                                         = 8 Times

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