1. Hansen Company uses the periodic inventory method and had the following inventory information available:

Units Unit Cost Total Cost

1/1 Beginning Inventory 100 $3 $ 300

1/20 Purchase 500 $4 2,000

7/25 Purchase 100 $5 500

10/20 Purchase 300 $6 1,800

1,000 $4,600

A physical count of inventory on December 31 revealed that there were 375 units on hand. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is __?

2. Nichols Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

Select one:

a. Bad Debts Expense 10,000 Allowance for Doubtful Accounts 10,000

b. Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000

c. Bad Debts Expense 8,000 Accounts Receivable 8,000

d. Bad Debts Expense 8,000 Accounts Receivable 8,000

3. The financial statements of the Melton Manufacturing Company reports net sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

Select one:

a. 52.1

b. 29.2

c. 21.9

d. 36.5

4. The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

True

False

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

Select one:

a. 40 times

b. 80 times

c. 54.7 times

d. 50 times

6. Assume Grammar Company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000, purchases of $75,000, and sales of $125,000. Grammar closes its records once a year on December 31. In the accounting records, the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Select one:

a. equal to $5,000.

b. more than $5,000.

c. less than $5,000.

d. less than $5,000.

7. The factor which determines whether or not goods should be included in a physical count of inventory is

Select one:

a. physical possession.

b. legal title.

c. management’s judgment.

d. whether or not the purchase price has been paid.

8. Nilson Company gathered the following reconciling information in preparing its August bank reconciliation:

Cash balance per books, 8/31 $7,000

Deposits in transit 300

Notes receivable and interest collected by bank 1,700

Bank charge for check printing 40

Outstanding checks 4,000

NSF check 340

The adjusted cash balance per books on August 31 is

Select one:

a. $8,320

b. $8,020

c. $4,620

d. $4,920

9. Merchandising companies that sell to retailers are known as

Select one:

a. brokers.

b. corporations.

c. wholesalers.

d. service firms.

10. Alpha First Company just began business and made the following four inventory purchases in June:

June 1 150 units $ 780

June 10 200 units 1,170

June 15 200 units 1,260

June 28 150 units 990

$4,200

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is

Select one:

a. $1,040.00

b. $1,072.50

c. $1,305.00

d. $1,320.00

11. At April 30, Kessler Company has the following bank information:

Cash balance per bank $4,600

Outstanding checks $280

Deposits in transit $550

Credit memo for interest $10

Bank service charge $20

What is Kessler’s adjusted cash balance on April 30?

Select one:

a. $4,860

b. $4,880

c. $4,330

d. $4,870

12. Financial information is presented below:

Operating Expenses $ 45,000

Sales Returns and Allowances 13,000

Sales Discount 6,000

Sales 150,000

Cost of Goods Sold 67,000

The profit margin ratio would be

Select one:

a. .127

b. .132

c. .139

d. .145

13. ogan Industries had the following inventory transactions occur during 2010:

Units Cost/unit

Feb. 1, 2010 Purchase 18 $45

Mar. 14, 2010 Purchase 31 $47

May 1, 2010 Purchase 22 $49

The company sold 51 units at $63. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO? (rounded to whole dollars)

Select one:

a. $2,441

b. $2,365

c. $848

d. $772

14. Use the following information regarding Black Company and Red Company to answer the question “Which amount is equal to Black Company’s “days in inventory” for 2010 (to the closest decimal place)?”

Year

Inventory Turnover Ratio

Ending Inventory

Black Company

2008

$26,340

2009

10.7

$29,890

2010

10.2

$30,100

Red Company

2008

$25,860

2009

8.8

$24,750

2010

9.5

$22,530

Select one:

a. 35.8 days

b. 34.1 days

c. 82.5 days

d. 29.5 days

15. M. Cornett is a corporation that sells breakfast cereal. Based on the accounts listed below, what are M. Cornett’s total trade receivables?

Income tax refund due $ 500

Advance due to the company from the company president 300

3-month note due from M. Cornett’s main customer 2,000

Interest due this month on the above note 100

Due and unpaid from this month’s sales 3,000

Due and unpaid from last month’s sales 1,000

Select one:

a. $4,000

b. $6,000

c. $5,000

d. $6,900

16. A company just began business and made the following four inventory purchases in June:

June 1 150 units $ 825

June 10 200 units 1,120

June 15 200 units 1,140

June 28 150 units 885

$3,970

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is

Select one:

a. $1,418

b. $1,475

c. $1,425

d. $1,400

17. Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $500,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-in $15,000. Determine net purchases.

18. Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $500,000; Purchase Returns and Allowances $14,000; Purchases Discounts $9,000; and Freight-in $15,000. Determine cost of goods purchased.

19. Under the periodic inventory system, acquisitions of merchandise are not recorded in the Merchandise Inventory account.

Select one:

True

False