6. Luna’s Curio Shop, Inc. has the following information for December 2017: Cash
ID: 2532975 • Letter: 6
Question
6. Luna’s Curio Shop, Inc. has the following information for December 2017:
Cash balance per books $14,100
Deposits in transit 4,150
A check recorded correctly by the bank for $4,500 was
incorrectly recorded by Luna’s bookkeeper as $5,400
Bank charge for check printing 80
Outstanding checks 5,370
The amount of cash shown on the balance sheet at December 31 is:
a. $13,700.
b. $12,880.
c. $14,920.
d. unknown.
7. Cho’s Coffee House, Inc. has the following data for January 2019:
Cash balance per bank $9,150
Deposits in transit 1,510
Notes receivable and interest collected by bank 500
Bank service charges 60
Outstanding checks 2,670
NSF checks 310
Bank error: check written by Joe’s Coffee House charged to Cho 560
The adjusted cash balance on January 31 is
a. $8,550.
b. $8,680.
c. $9,110.
d. $8,300.
8. The Allowance for Bad Debts is classified as a(n) ______ account, with a normal ______ balance.
a. liability, credit.
b. contra expense, credit.
c. expense, debit.
d. contra asset, credit.
9. Accounts receivable are reported on the balance sheet
a. historical cost.
b. weighted average cost.
c. at net realizable value.
d. market value.
10. Under the allowance method, Bad Debt Expense is recorded
a. when an individual account is written off.
b. when the loss amount is known.
c. for an amount that the company estimates it will not collect.
d. at the time of the sale on account.
11. For 2017 Crookshanks Pest Control, Inc. had the following data: Accounts Receivable $51,200; Sales $120,000; collections from customers $85,000; Bad debt expense $2,400; Allowance for Bad Debts $2,800; write-offs of accounts receivable $1,800. Net realizable value of accounts receivable at year-end is:
a. $51,200
b. $49,400
c. $35,000
d. $48,400
12. What is an advantage of using the percent age of receivables method of estimating uncollectible accounts?
a. The direct write-off method does a better job of matching revenues and expenses than the allowance method.
b. The percentage-of-sales approach takes into account the existing balance in the Accounts Receivable account.
c. The direct write-off method takes into account the existing balance in the Allowance for Bad Debts account.
d. The percentage-of-receivables approach takes into account the existing balance in the Allowance for Bad Debts account.
13. When costs are rising over time:
a. LIFO results in higher profits that FIFO.
b. Cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold.
c. ending inventory balances will be greater under LIFO.
d. FIFO results in higher profits than LIFO.
14. One of the principal reasons for selecting the LIFO inventory cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:
a. net income will be higher.
b. income taxes will be lower.
c. balance sheet inventory values will be higher.
d. a higher selling price can be established.
15. What is an advantage of using the FIFO inventory cost flow assumption?
a. In periods of rising prices, FIFO results in the inventory value on the balance sheet that is closest to current cost.
b. In periods of rising prices, FIFO results in lower income taxes.
c. In periods of rising prices, FIFO results in lower net income.
d. Inventory cost under FIFO is more difficult to track.
16. In a period of rising prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?
a. Average cost method
b. LIFO method
c. FIFO method
d. Need more information to answer
17. “Cost of goods sold” in the financial statements reports:
a. the total cost of inventory on hand as an asset on the balance sheet.
b. the total cost of merchandise purchased during the period as an expense on the income statement.
c. the total cost of merchandise sold during the period as an expense on the income statement.
d. the total cost of inventory purchased during the period as an asset on the balance sheet.
18. The FIFO inventory method requires that
a. the cost of the first items purchased be assigned to cost of goods sold.
b. the cost of the last items purchased be assigned to cost of goods sold.
c. the earliest goods purchased be allocated to ending inventory.
d. the company uses a perpetual inventory system.
19. The LIFO inventory method requires that
a. the cost of the first items purchased be assigned to cost of goods sold.
b. the cost of the last items purchased be assigned to cost of goods sold.
c. the latest goods purchased be allocated to ending inventory.
d. the company uses a periodic inventory system.
Explanation / Answer
As per chegg guidelines we answer one question per post. Kindly post remaining questions in next post c. $14,920 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Cash balance per books 14,100.00 Less Bank charge for check printing (80.00) Add Cheques Incorrectly recorded by Luna's shopkeeper = 5400 - 4500 900.00 amount of cash shown on the balance sheet at December 31 14,920.00
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