George Washington UniversityACCY 2001 1) Flyer Company has provided the following information prior to any year-end bad debt adjustment:   Cash sales, $150,000 Credit sales, $450,000 Selling and administrative expenses, $110,000 Sales returns and allowances, $30,000 Gross profit, $490,000 Accounts receivable ending balance is $120,000 Sales discounts, $14,000 Allowance for doubtful accounts credit balance, $1,400   Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible

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George Washington UniversityACCY 2001

1) Flyer Company has provided the following information prior to any year-end bad debt adjustment:

 

• • Cash sales, $150,000
  • Credit sales, $450,000
  • Selling and administrative expenses, $110,000
  • Sales returns and allowances, $30,000
  • Gross profit, $490,000
  • Accounts receivable ending balance is $120,000
  • Sales discounts, $14,000
  • Allowance for doubtful accounts credit balance, $1,400

 

Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

 

(A) $6,200.

(B) $4,800.

(C) $18,000.

(D) $3,400.

 

2. Superior Company has provided you with the following information before any year-end adjustments:

 

• Net credit sales are $140,000.
• Historical percentage of credit losses is 3%.
• Allowance for doubtful accounts has a credit balance of $100.
• Accounts receivables ending balance is $50,000.

 

What is the estimated bad debt expense using the percentage of credit sales method?

 

(A) $4,300.

(B) $1,500.

(C) $4,200.

(D) $4,100.

3. Which of the following statements is correct when inventory unit costs are decreasing?

1. LIFO will result in higher net income and a higher inventory valuation than will FIFO.
2. FIFO will result in higher net income and a lower inventory valuation than will LIFO.
3. FIFO will result in higher net income and a higher inventory valuation than will LIFO.
4. LIFO will result in lower net income and a higher inventory valuation than will FIFO.

4. Which method of depreciation results in periodic depreciation expense that fluctuates from one period to the next, not necessarily in a steadily upward or downward direction?

1. Straight-line.
2. Units-of-production.
3. Declining balance.
4. All of the above.

5. On January 1, 2014, a corporation issued an undisclosed amount of 10-year, 12% bonds. The interest is payable semi-annually on June 30 and December 31. The issue price was $413,153 based on a 10% market interest rate. Assuming the effective-interest method of amortization is used, and rounding all calculations to the nearest whole dollar, what is the interest expense for the six-month period ending June 30, 2014?

(A) $24,000.

(B) $24,789.

(C) $20,000.

(D) $20,658.

6. Phipps Company borrowed $28,000 cash on November 1, 2014, and signed a twelve-month, 6% interest-bearing note payable with interest payable at maturity. Assuming that adjusting entries have not been made during the year, the amount of accrued interest payable to be reported on the December 31, 2014 balance sheet is which of the following?

(A) $420.

(B) $1,680.

(C) $280.

(D) $1,400.

7. Which of the following correctly describes the effects of initially recording deferred revenues when cash is received from a customer?

1. Revenues are increased.
2. Liabilities are not affected.
3. Retained earnings increases.
4. Net income is not affected.