Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

What is the annual interest rate of a sales discount of 2/10,n/30?

In 2012,G CO.reported product sales of $717.8 million and trade receivables of $79.4 million.In 2011,product sales were $584.9 million and trade receivables were $71.4 million.What was its receivables turnover ratio for 2012?

A bank service charge is added to the depositor's "book balance" in a bank reconciliation.

The receivable turnover ratio is computed by dividing net sales by net trade receivables at the end of the year.

When receivables are material,companies must employ the allowance method to account for uncollectibles.

When preparing a bank reconciliation,which of the following would be deducted from the company's cash balance?

T Co's gross profit percentage has been increasing in the three years from 2010 through 2012 from 36.5% to 39.8%.This change has most likely been caused by which of the following?

If a customer pays her bill after her account has already been written off,the company receiving the payment should record the account reinstatement with which of the following?

On Liberty's income statement for the year,what would bad debt expense amount to?

Under the instalment method,revenue is recognized when the customer does which of the following?

A Co.and G Co.are competitors in the biotechnology market.In 2012,A Co.reported a gross profit percentage of 86.3% while G Co's percentage was 80.7%.What is the most likely cause of G Co.'s lower gross profit percentage?

If a company uses the completed contract method rather than the percentage of completion method,the total profit the company recognizes from the beginning of the project throughout its completion will be which of the following?

The primary purpose of preparing a bank reconciliation is to reconcile the bank balance at the beginning of the period with the bank balance at the end of the period.

Cash on hand (undeposited),cash deposited in banks,and postage stamps should be included in the cash balance reported on the statement of financial position.

When a company records adjusting entries following the completion of a bank reconciliation,the cash account is debited for the amount of any deposit in transit.

When using the instalment method,revenue is recognized at the time goods are delivered to the customer.

For proper matching of expenses to revenues,bad debt expense should be recognized when the specific customer's account is determined to be uncollectible.

The December 31,2011 statement of financial position of Shylark Limited had Trade Receivables of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000.During 2012 the following transactions occurred: service revenue billed on account,$1,500,000; collections from customers,$1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected. Required: (a)Record the 2012 transactions. (b)If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable,what is the adjusting entry at December 31,2012?

Apple Company's bank statement showed an ending balance of $5,000.Items appearing in the bank reconciliation included: outstanding cheques,$500; deposits in transit,$1,000; bank service charges,$10; and Orange Company's cheque erroneously charged to Apple's bank account by the bank,$110.What is the correct cash balance at the end of the month?

Calculate the average collection period for 2012 and 2011: a.2012 __________ b.2011 __________