Question

In: Accounting

16. Owen Company's unadjusted book balance at June 30 is $14,440. The company's bank statement reveals...

16. Owen Company's unadjusted book balance at June 30 is $14,440. The company's bank statement reveals bank service charges of $120. Two credit memos are included in the bank statement: one for $1,490, which represents a collection that the bank made for Owen, and one for $200, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is:

Multiple Choice

$14,440.

$16,010.

$15,730.

$16,250.

17.

At March 31, Cummins Co. had a balance in its cash account of $10,600. At the end of March the company determined that it had outstanding checks of $1,145, deposits in transit of $710, a bank service charge of $40, and an NSF check from a customer for $225. The true cash balance at March 31 is:

Multiple Choice

$10,165

$10,335

$10,600

18. Duke Company's unadjusted bank balance at March 31 is $4,180. The bank reconciliation revealed outstanding checks amounting to $620 and deposits in transit of $460. Based on this information, Duke's true cash balance is:

Multiple Choice

$4,180.

$3,720.

$4,640.

$4,020.

19. On September 30, the bank statement of Fine Company showed a balance of $11,300. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records:

(1) deposits in transit amounted to $4,650

(2) outstanding checks amounted to $8,500

(3) a $700 check was incorrectly drawn on Fine's account

(4) NSF checks returned by the bank were $1,100

(5) bank service charge was $39

(6) credit memo for $150 for the collection of one of the company's account receivable

Based on the above information, the true cash balance was:

Multiple Choice

$8,150.

$8,261.

$7,161.

$8,911.

20. Rainey Company's true cash balance at October 31 is $4,040. The following information is available for the bank reconciliation:

Outstanding checks, $650

Deposits in transit, $490

Bank service charges, $100

The bank had collected an account receivable for Rainey Company, $1,100

The bank statement included an NSF check written by one of Rainey's customers for $660

Based on this information Rainey's unadjusted book balance at October 31 is:

Multiple Choice

$4,200.

$4,800.

$3,700.

$3,800.

21. The inventory records for Radford Co. reflected the following

Beginning inventory @ May 1 1,900 units @ $ 5.40
First purchase @ May 7 2,000 units @ $ 5.60
second purchase @ May 17 2,200 units @ $ 5.70
Third purchase @ May 23 1,800 units @ $ 5.80
Sales @ May 31 6,000 units @ $ 7.30

Determine the amount of ending inventory assuming the FIFO cost flow method.

Multiple Choice

$11,010

$11,020

$10,260

$6,760

22. Rosewood Company made a loan of $8,400 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be:

Multiple Choice

$504 and $0

$0 and $504

$378 and $126

$126 and $378

23. On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $64,000 and $1,400, respectively. During the year Kincaid reported $155,000 of credit sales. Kincaid wrote off $1,250 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $166,700. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.

The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:

Multiple Choice

$1,550.

$640.

$1,667.

$1,700.

24. Poole Company purchased two identical inventory items. One of the items, purchased in January, cost $30. The other, purchased in February, cost $37. One of the items was sold in March at a selling price of $90. Assuming that Poole uses a LIFO cost flow, which of the following statements is correct?

Multiple Choice

The balance in ending inventory would be $37.

The amount of gross margin would be $53.

The amount of ending inventory would be $33.50.

The amount of cost of goods sold would be $30.

25. Glasgow Enterprises started the period with 75 units in beginning inventory that cost $2.00 each. During the period, the company purchased inventory items as follows. Glasgow sold 395 units after purchase 3 for $10.20 each.

Purchase No. of Items Cost
1 370 $ 2.50
2 115 $ 2.60
3 60 $ 3.00

Glasgow's ending inventory under LIFO would be:

Multiple Choice

$675.

$585.

$525.

$450.

Solutions

Expert Solution

16. Owen Company : $16010

True Cash Balance = Unadjusted Book Balance - Service Charge + Collection + Interest = 14440 - 120 + 1490 + 200 = 16010

17. Cummins Co. :$10335

True Cash Balance = Unadjusted Book Balance - Service Charge - NSF check = 10600 -40 - 225 = 10335

18. Duke Company :$4020

True Cash Balance = Unadjusted Book Balance - Outstanding checks - deposits in transit = 4180 - 620 + 460 = 4020

19. Fine Company :$8150

True Cash Balance = Undajusted Book Balance - Outstanding checks + deposits in transit + error correction

True Cash Balance = 11300 - 8500 + 4650 + 700 = 8150

20. Rainey Company :$3700

True Cash Balance = Undajusted Book Balance - Service charge + Receivables collection - NSF check

4040 = Unadjusted Book Balance- 100 + 1100 - 660 = 4380

Unadjusted Book Balance = 4040 + 100 - 1100 + 660 = 3700

21. Radford Co. :$11010

Closing Stock = 1900 + 2000 + 2200 + 1800 - 6000 = 1900

FIFO Method Ending Inv. = Third purchase @ May 23 + 100 x second purchase @ May 17

FIFO Method Ending Inv. = 1800 x 5.80 + 100 x 5.70 = 10440 + 570 = 11010

22. Rosewood Company :378 and 126

Year 1 Interest = 8400 x 6% x 9/12 = 378 Year 2 Interest = 8400 x 6% x 3/12 = $126

23. Kincaid Company :$1550

The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:

155000 x 1% = 1550

24. Poole Company : The amount of gross margin would be $53.

Since LIFO is used COGS would be 1 x $37 = $37 ;Gross margin = $90 - $37 = $53

25. Glasgow Enterprises : $525.

Glasgow's ending inventory under LIFO would be:

Closing Stock = 75 + 370 + 115 + 60 - 395 = 225

Since LIFO is used :Ending inventory = 75 x 2 + 150 x 2.50 = 150 + 375 = 525


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