Toaz ACCOUNTING PROCESS and problems PDF

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Toaz ACCOUNTING PROCESS And problems to practice with...

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BASIC CONCEPTS Revenue Cycle Trade discounts 1. Melissa Company sold an item on credit for P5,000,000 less multiple trade discounts of 20 and 5. Which entry to record this sale is correct? A. Debit Accounts Receivable for P4,125,000 and credit Sales for P3,750,000 and Output Tax for P375,000. B. Debit Accounts Receivable for P4,180,000 and credit Sales for P3,800,000 and Output Tax for P380,000. C. Debit Accounts Receivable for P5,500,000 and credit Sales for P5,000,000 and Output Tax for P500,000. D. Debit Accounts Receivable for P5,500,000 and Trade Discount for P1,200,000 and credit Sales for P5,000,000, Output Tax for P500,000 and Allowance for Sales Discount for P1,200,000. CPAR 0503 2.

Bernadette Company sold an item on credit for P5,000,000 less multiple trade discounts of 20 and 5. The correct entry to record this sale is A. Debit Accounts Receivable for P4,180,000 and credit Sales for P3,800,000 and Output tax for P380,000. B. Debit Accounts Receivable for P5,500,000 and credit Sales for P5,000,000 and Output Tax for P600,000. C. Debit Accounts Receivable for P4,300,000 and Sales Discount for P1,200,000 and credit Sates for P5,000,000 and Output Tax for P500,000. D. Debit Accounts receivable for P5,500,000 and Trade Discount for P1,200,000 and credit Sales for P5,000,000, Output Tax for P500,000 and Allowance for Sales Discount for P1,200,000. CPAR 1004

Accounts Receivable 3. The following data are given for Mazda, Inc.: Cash Credit Total Cost of sales P50,000 P450,000 P500,000 Cash received from customers 65,000 585,000 650,000 Assuming merchandise was marked to sell as follows: Cash sales, at 30% about cost and credit sales, at 40% above cost, all of which are collectible. The balance of accounts receivable at the end of the period was (M) A. P12,500 C. P135,000 B. P45,000 D. P147,500 R&E 2012 Collection

List price, trade discount, prepaid freight, cash discount 4. On June 1, Pitt Corp. sold merchandise with a list price of $5,000 to Burr on account. Pitt allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB shipping point. Pitt prepaid $200 of delivery costs for Burr as an accommodation. On June 12, Pitt received from Burr a remittance in full payment amounting to: A. $2,744 C. $2,944 B. $2,940 D. $3,140 Becker 2013 2.

On June 1, 2012, Jeanah Company sold merchandise with a list price of P5,000,000 to a customer. The entity allowed trade discounts of 20% and 10%. Credit terms were 5/10, n/30 and the sale was made FOB shipping point. The entity prepaid P100,000 of delivery cost for the customer as an accommodation. On June 11, 2012, what is the full remittance from the customer? (M1) A. 3,420,000 C. 3,600,000 B. 3,520,000 D. 3,700,000 CPAR 1012

5.

On June 1, 2014 Compassion Company sold merchandise with a list price of P 1,000,000 to a customer. The entity allowed trade discounts of 20% and 10%. Credit terms were 5/10, n/30 and the sale was made FOB shipping point. The entity prepaid P50,000 of delivery cost for the customer as an accommodation On June 11, 2014, what amount is received from the customer as full remittance? A. 684,000 C. 770,000 B. 720,000 D. 794,000 FA © 2014

35. Crabtree & Evelyn Corp. normally sells ladies’ apparels to preferred customers on account. Trade discounts of 20% and 10% are granted with credit terms of 2/15, n/60. On August 1, 2004, apparels with a list price of P250,000 were sold FOB seller’s warehouse. Crabtree & Evelyn prepaid the freight of P150 as an accommodation. The amount that Crabtree & Evelyn should receive on August 10, 2004 when the customer remits the full payment is A. P171,603 C. P176,506 B. P171,650 CRC 0504 D. P176,550 15. On April 28, 2012 Malcom Company sold merchandise with a list price of P5,000,000 to Forbes. Malcom allowed trade discounts of 20% and 10%. Credit terms were 5/10, n/30. The goods were shipped FOB destination, freight collect. Total freight charges paid by the Forbes amounted to P50,000. On May 8, 2012, Malcom received from Forbes full remittance of (M1) A. P3,370,000 C. P3,550,000

B. P3,420,000

D. P3,600,000

Cabarles

Purchases – Gross Method Inventoriable costs List price, trade discount 6. Ami Retailers purchased merchandise with a list price of $100,000, subject to a trade discount of 20 percent and credit terms of 2/10, n/30. At what amount should Ami record the cost of this merchandise if the gross method is used? (E) A. $100,000 C. $98,000 B. $80,000 D. $78,400 S, S & S 9.

Walters Co. purchased raw materials with a catalog price of $70,000 on March 2, 2010. Credit terms of 4/20, n/60 applied. Walters uses a perpetual inventory system and the gross price method. If Walters pays for the purchase on March 18, 2010, calculate what amount is recorded for inventory on March 2, 2010. A. $42,000 C. $67,200 B. $56,000 D. $70,000 NB&J 11e

7.

West Retailers purchased merchandise with a list price of $20,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. West should record the cost of this merchandise as (E) A. $14,000 C. $15,600 B. $14,400 D. $20,000 AICPA 0590

8.

Walsh Retailers purchased merchandise with a list price of $50,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as A. $35,000. C. $39,000. B. $36,000. D. $50,000. AICPA adapted

9.

Utley Retailers purchased merchandise with a list price of $30,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Utley should record the cost of this merchandise as (E) A. $21,000. C. $23,400. B. $21,600. D. $30,000. K, W & W

10. West Retailers purchased merchandise with a list price of $20,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. West should record the cost of this merchandise as (E)

A. $14,000 B. $14,400

C. $15,600 D. $20,000

AICPA 0590

11. MORO Co. purchased an item of merchandise quoted and listed at P150,000 under the following terms: Trade discounts of 15%, 10% and 5%; 2/10, n/30. What was the invoice price of the merchandise? (E) A. P105,000.00 C. P100,842.00 B. P109,012.50 D. P104,695.60 RPCPA 1087 12. Kindness Company regularly buys sweaters and is allowed a trade discount of 20% and 10%. The entity made a purchase on March 20 and received an invoice with a list price of P900,000, a freight charge of P50,000, and payment terms of net 30 days. The entity should record the purchase at what amount? A. 630,000 C. 680,000 D. 698,000 FA © 2014 B. 648,000 List price, trade discount, freight-in 13. Dean Sportswear regularly buys sweaters from Mill Company and is allowed trade discounts of 20% and 10% from the list price. Dean made a purchase on March 20, 2004, and receive an invoice with a list price of P600,000, a freight charge of P15,000 and payment terms of 2/10, n/30. Dean should record the purchase at (E) A. 432,000 C. 438,360 B. 447,000 D. 435,000 AICPA 14. Galleria Sportswear, Inc. regularly buys sweaters from Bon Company and is allowed a trade discount of 20% and 10% from the list price. Galleria made a purchase on March 20, 2012, and received an invoice with a list price of P90,000, a freight charge of P5,000, and payment terms of net 30 days. What is the total cost of the inventory purchase? (E) A. P63,000 C. 69,000 B. P64,000 R&E 2012 D. P69,800 81. Ella Company regularly buys sweaters from Millard Company and is allowed trade discount of 20% and 10% from a list price. Ella made a purchase on March 20 and received an invoice with a list price of P4,000,000, a freight charge of P100,000, and payment terms of net 30 days. Ella should record the purchase at (E) A. 2,880,000 C. 4,000,000 B. 2,980,000 D. 4,100,000 Siy List price, trade discount, freight, insurance, import-related costs

15. Brilliant Company purchased motorcycles from various countries for export to other countries. The entity has incurred the following costs during the current year: 5,000,000 Cost of purchases based on vendors' invoices Trade discounts on purchases already deducted from vendors' invoices 500,000 400,000 Import duties Freight and insurance on purchases 1,000,000 Other handling costs relating to imports 100,000 Salaries of accounting department 600,000 Brokerage commission paid to agents for arranging imports 200,000 Sales commission paid to sales agents 300,000 After-sales warranty costs 250,000 What is the total cost of the purchases? A. 5,700,000 C. 6,500,000 B. 6,100,000 D. 6,700,000 FA © 2014 FOB Shipping point 16. An enterprise with a December 31 year-end purchased 2,000 of inventory on account. The seller was responsible for delivery to the shipping point, with freight of 50 paid at destination by the buyer. The invoice date was December 27, 2001, and the goods arrived on January 3, 2002. What is the correct amount of inventory and freight-in, respectively, relating to this purchase on the 2001 financial statements? CIA 0592 A. B. C. D. Inventory 0 2,050 0 2,000 Freight-In 0 0 50 50 FOB destination 17. An enterprise with a December 31 year-end purchased 2,000 of inventory on account. The terms required the seller to deliver to the destination, with freight of 50 paid at destination by the buyer. The invoice date was December 27, 2001, and the goods arrived on January 3, 2002. What is the correct amount of inventory and freight-in relating to this purchase on the 2001 financial statements? CIA 0592 IV-33 A. B. C. D. Inventory 0 2,050 0 2,000 Freight-In 0 0 50 50 18. On December 28, 2011, Kerr Manufacturing Co. purchased goods costing $50,000. The terms were FOB destination. Some of the costs incurred in connection with the sale and delivery of the goods were as follows: Packaging for shipment $1,000

Shipping 1,500 Special handling charges 2,000 These goods were received on December 31, 2011. In Kerr’s December 31, 2011 balance sheet, what amount of cost for these goods should be included in inventory? A. $54,500 C. $52,000 B. $53,500 D. $50,000 AICPA 1191 Invoice price 19. The following costs were among those incurred by Woodcroft Corporation during 2011: Merchandise purchased for resale $500,000 Salesmen's commissions 40,000 Interest on notes payable to vendors 5,000 How much should be charged to the cost of the merchandise purchases? (E) A: $500,000 C: $540,000 B: $505,000 D: 7.

On December 28, 1996, Arlington Co. purchased goods costing P1,000,000. The terms were FOB destination. Some of the cost incurred in connection with the sale and delivery of the foods were as follows: Packaging for shipment P20,000 Shipping 30,000 Special handling charges 40,000 These goods were received on December 31, 1996. In Arlington’s December 31, 1996 balance sheet, what amount of costs for these goods should be included in inventory? (E)) A. P1,040,000 C. P1,090,000 B. P1,070,000 D.

20. On December 28, 2001, Nord Manufacturing Co. purchased goods costing $50,000. The terms were FOB destination. Some costs incurred in connection with the sale and delivery of the goods were Packaging for shipping $1,000 Shipping 1,500 Special handling charges 2,000 These goods were received on December 31, 2001. In Nord’s December 31, 2001 balance sheet, what amount of cost should be included in inventory? (E) A. $54,500 C. $52,000 D. $50,000 AICPA 1191 B. $53,500

$545

P1,0

21. On December 26, 2004, Karen Company purchased goods costing P5,000,000. The freight term is FOB destination. Some of the costs incurred in connection with the sale and delivery if the goods were: Packaging for shipment 100,000 Shipping 200,000 Special handling charges 300,000 These goods were received on December 31, 2004. In the December 31, 2004 balance sheet, what amount of cost for these goods should be included in inventory? (E) A. 5,000,000 C. 5,300,000 B. 5,600,000 D. 5,500,000 CPAR Purchases, freight-in 22. On December 15, 2011, Flanagan purchased goods costing $100,000. The terms were FOB shipping point. Costs incurred by Flanagan in connection with the purchase and delivery of the goods were as follows: Normal freight charges $3,000 Handling costs 2,000 Insurance on shipment 500 Abnormal freight charges for express shipping 1,200 The goods were received on December 17, 2011. What is the amount that Flanagan should charge to inventory and to current period expense? Wiley 2012 A B C D Inventory $3,000 $5,000 $5,500 $6,700 Current period expense $3,700 $1,700 $1,200 $0 Purchases, Freight-in, Purchase Return 57. The following information applied to Greer, Inc. for 2001: Merchandise purchased for resale Freight-in Freight-out Purchase returns Greer's 2001 inventoriable cost was (E) A. $200,000. C. $206,000. B. $203,000. D. $211,000. 23. The following information applied to Howe, Inc. for 2010: Merchandise purchased for resale Freight-in

$200,000 8,000 5,000 2,000

Freight-out Purchase returns Howe's 2010 inventoriable cost was A. $300,000. B. $303,000.

$300,000 8,000

C. $306,000. D. $311,000.

95. The following information applied to Michaels Company for 2014: Merchandise purchased for resale ..................... Freight-in ........................................... Interest on notes payable to vendors ................. Purchase returns ..................................... Michaels' inventoriable cost for 2014 was A. $405,000 C. $407,500. B. $406,000. D. $409,000. 24. The following information applied to Fenn, Inc. for 1989: Merchandise purchased for resale Freight-in Freight-out Purchase return Fenn’s 1989 inventoriable cost was (E) C. $408,000 A. $400,000 B. $403,000 D. $413,000 25. The following information applied to Atlas Co. for 2001: Merchandise purchased for resale Freight-in Freight-out Purchase returns The company’s 2001 inventoriable cost was (E) C. $816,000 A. $800,000 B. $806,000 D. $826,000 *.

K, W & W

5,000 2,000

The following information pertains to Rasner Company for 2009: Merchandise purchased for resale Freight out Freight in Storage cost Purchase returns

AICPA adapted $400,000 7,500 3,000 2,500 S&S 19e $400,000 10,000 5,000 2,000 AICPA 1190 $800,000 20,000 10,000 4,000 AICPA 1190 4,000,000 200,000 500,000 50,000 120,000

The inventoriable cost should be A. 4,250,000 B. 4,380,000

C. 4,500,000 D. 4,630,000

95. The following information applied to Landon Company for 2005: Merchandise purchased for resale ..................... Freight-in ........................................... Interest on notes payable to vendors ................. Purchase returns ..................................... Landon's inventoriable cost for 2005 was (E) C. $306,000. A. $309,000. B. $307,500. D. $301,500. 95. The following information applied to Michaels Company for 2014: Merchandise purchased for resale ..................... Freight-in ........................................... Interest on notes payable to vendors ................. Purchase returns ..................................... Michaels' inventoriable cost for 2014 was (M) A. $409,000. C. $406,000. D. $405,000 B. $407,500.

Siy $300,000 7,500 3,000 1,500 S, S & S $400,000 7,500 3,000 2,500 S&S 18e

Purchases, freight-in, handling costs, insurance 25. December 15, 2011, Boston purchased goods costing P100,000. The terms were FOB shipping point. Costs incurred by Boston in connection with the purchase and delivery of the goods were as follows: Normal freight charges P3,000 Handling costs 2,000 Insurance on shipment 500 Abnormal freight charges for express shipping 1,200 What is the total amount to be charged to inventory? (E) A. P103,000 C. P105,500 B. P105,000 D. P106,700 Cabarles Invoice Price, Freight-in, Insurance, Materials & Labor 26. The following costs pertain to Den Co.’s purchase of inventory: 700 units of product A Freight-in Cost of materials and labor incurred to bring product A to saleable condition

$3,750 175 900

Insurance cost during transit of purchased goods 100 Total $4,925 What amount should Den record as the cost of inventory as a result of this purchase? A: $3,925 C: $4,825 B: $4,650 AICPA R08 D: $4,925 Importation charges 27. Brilliant Company purchased motorcycles from various countries for export to other countries. The entity has incurred the following costs during the current year: 5,000,000 Cost of purchases based on vendors' invoices Trade discounts on purchases already deducted from vendors' invoices 500,000 Import duties 400,000 Freight and insurance on purchases 1,000,000 Other handling costs relating to imports 100,000 Salaries of accounting department 600,000 Brokerage commission paid to agents for arranging imports 200,000 Sales commission paid to sales agents 300,000 After-sales warranty costs 250,000 What is the total cost of the purchases? A. 5,700,000 C. 6,500,000 D. 6,700,000 FA © 2014 B. 6,100,000 Cash payments Payment within discount period 28. A firm purchased goods with a purchase price of $1,000 and credit terms of 1/10 net 30. The firm paid for these goods on the 5th day after the date of sale. The firm must pay _____ for the goods. (E) A. $990 C. $1,000 B. $900 D. $1,100 Gitman 29. A firm purchased goods on January 27 with a purchase price of $1,000 and credit terms of 2/10 net 30 EOM. The firm paid for these goods on February 9. The firm must pay _____ for the goods. (E) A. $1,000 C. $800 B. $980 D. $900 Gitman Trade discount, payment within discount period 30. The list price and term of a merchandise purchased is P8,000 less 15%, 10%, 5%, 2/10, n/30. The payment within the discount period is (E)

A. P5,697.72 B. P5,654.00

C. P5,488. D. P7,840

31. MORO Co. purchased an item of merchandise following terms: Trade discounts of 15%, 10% payment if paid within the discount period? (E) A. P102,900.00 C. B. P106,832.25 D.

RPCPA 0587

quoted and listed at P150,000 under the and 5%; 2/10, n/30. How much was the P100,842.00 P104,695.60

RPCPA 1087

32. Celine Company purchased an item of merchandise quoted and listed at P150,000 under the following terms: Trade discounts of 15%, 10%, 5%, 2/10, n/30. How much was the cash payment if settlement was made within the discount period? A. P106,832.25 C. P102,900.00 B. P104,693.50 D. P100,842.00 R&E 2012 Trade discount, FOB shipping point, prepaid freight, cash discount, 45. On June 1, 1997, Ebecom Corp. sold merchandise with a list price of P200,000 to Greenwich, Inc. on account. Ebecom allowed trade discounts of 20% and 10%. Credit terms were 2/30, n/60 and the sale was made FOB shipping point. Ebecom prepaid P3,000 of insurance for Greenwich as an accommodation. On June 20, 1997, Greenwich paid Ebecom his full account of (E) A. P150,060 C. P147,060 B. P144,120 D. P141,120 RPCPA 0597 33. On June 1, 2011, Pitt Corp. sold merchandise with a list price of $5,000 to Burr on account. Pitt allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB shipping point. Pitt prepaid $200 of delivery costs for Burr as an accommodation. On June 12, 2011, Pitt received from Burr a remittance in full payment amounting to A. $2,744 C. $2,944 B. $2,940 D. $3,140 Wiley 2011 84. On June 1, 2009, Elijah Company sold merchandise with a list price of P5,000,000 to XYZ. Elijah allowed trade discounts of 20% and 10%. Credit terms were 5/10, n/30 and the sale was Made FOB shipping point. Elijah prepaid P50,000 of delivery cost for XYZ as an accommodation. On June 11, 2009, Elijah received from XYZ full remittance of A. 3,420,000 C. 3,800,000 B. 3,470,000 D. 3,850,000 Siy FOB destination, freight paid by buyer, payment after the discount period

34. Sylvia Systems Corp. received an invoice for P12,000 from Lyndon Enterprises Co. for a shipment of specialty supplies, F.O.B. destinations, terms 2/10, n/60. In addition, the Sylvia Systems paid P800 for freight on this shipment to a trucking firm. If the invoice from Lyndon Enterprises is paid 15 days after it is received, Sylvia Systems mu...