Exam 5: Accounting for Receivables and Inventory Cost Flow

When prices are falling, LIFO will result in:

Rosewood Company made a loan of $16,000 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:

The adjusting entry to recognize uncollectible accounts expense is an asset use transaction.

Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each. During the period, the company purchased inventory items as follows. Glasgow sold 220 units after purchase 3 for $17.00 each. Glasgow's cost of goods sold under FIFO would be:

Elliston Company accepted credit card payments for $10,000 of services provided to customers. The credit card company charges a 3% service charge. This transaction would increase:

The amount of accounts receivable that is actually expected to be collected is known as the:

Anton Co. uses the perpetual inventory method. Anton purchased 400 units of inventory that cost $12.00 each. At a later date the company purchased an additional 600 units of inventory that cost $16.00 each. If Anton uses the FIFO cost flow method and sells 700 units of inventory, the amount of cost of goods sold will be:

The face value of Accounts Receivable plus the balance in the Allowance for Doubtful Accounts is equal to the net realizable value of the receivables.

Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $23,000 and $900, respectively. During Year 2, Allegheny wrote off $1,500 of Uncollectible Accounts. After aging its receivables, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $1,600. What will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?

During a period of declining prices, a company would report a lower gross margin using the FIFO cost flow method than with LIFO.

Indicate whether each of the following statements is true or false. _____ a) The FIFO cost flow method assumes that the company physically rotates inventory so that the oldest inventory is sold first. _____ b) In a period of rising prices, FIFO gives higher cost of goods sold than LIFO. _____ c) Under the weighted average cost flow method, the cost per unit of ending inventory is equal to the cost per unit of inventory sold. _____ d) In a period of declining prices, LIFO will result in higher income tax expense than FIFO. _____ e) In a period of rising prices, FIFO gives higher ending inventory than LIFO does.

The inventory records for Radford Co. reflected the following Determine the amount of cost of goods sold assuming the LIFO cost flow method.

When an uncollectible account receivable is written off, the amount of total assets is unchanged.

On January 1, Year 2, the Accounts Receivable balance was $37,000 and the balance in the Allowance for Doubtful Accounts was $2,800. On January 15, Year 2, an $800 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:

When a company receives payment from a customer whose account was previously written off, the customer's account should be reinstated.

Alberta Company accepts a credit card as payment for $450 of services provided for the customer. The credit card company charges a 4% handling charge for its collection services. Select the answer that shows how the entry to record the sale would affect Alberta's financial statements.

In an inflationary environment:

Using the allowance method of accounting for uncollectible receivables requires an estimate of the amount of receivables that will not be collected.

Chase Co. uses the perpetual inventory method. The inventory records for Chase reflected the following Assuming Chase uses a LIFO cost flow method, the amount of cost of goods sold for the sales transaction on January 18 is:

Singleton Company's perpetual inventory records included the following information: If Singleton uses the FIFO cost flow method, its cost of goods sold would be $4,490.