ACG2021 Practice Exam-Crosson
Chapter 5, 6, 7, and 8
Review suggested SE, E, and P problems--- Revisit your homework! Also Ace,
Ace+, Learn on Your Own
Chapter 6 focused on terms; journal entries periodic and perpetual
inventory; muItistep income statement--COGS
1. When a customer pays the freight on a purchase, the journal entry would
include:__________
2. Which of the following is closed with a debit? Freight In; Freight Out; Purchases:
Purchases Returns and Allowances; or Sales Discount
3. Assuming that net purchases during the year were $170,000 and that ending inventory
was $4,000 more than the beginning inventory of $30,000, how much was the cost of
goods sold?________
4. Under the periodic inventory system, which of the following appears both on the income
statement and the balance sheet? Purchases; Freight In; Freight Out; Dividend Income, or
Merchandise Inventory
5. Which of the following is not considered in computing net purchases? Freight paid on
goods shipped to customers; Purchases Discount; Purchases; Freight paid on purchased
goods; or Purchases Returns and Allowances
6. Net income results when gross margin exceeds which of the following: the cost of goods
sold; the cost of goods available for sale; purchases; the cost of goods sold plus operating
expenses; or operating expenses
7. A sale on July 21 with terms of n/10 is due to be collected by:__________
8. How is Net Sales is computed?________
9. How is Cost of Goods Sold computed?_______
10. What are the entries to record a purchase of inventory on account under the periodic and
perpetual methods?______
11. What are the entries to record the sale of inventory on account under the periodic and
perpetual methods?_______
Chapter 6 focused on determining cost of goods sold and ending inventory
using Specific identification, FIFO, LIFO, and Average Cost Periodic Inventory;
determining cost of goods sold and ending inventory using FIFO and LIFO
Perpetual Inventory; and estimating inventories using either the Gross Profit
method or the Retail method.
1. A retail company has goods available for sale of $500,000 at retail and $200,000 at cost
and ending inventory of $50,000 at retail. What is the estimated cost of goods sold?_____
2. A company has a goods available for sale of $500,000, sales of $600,000, and a gross
profit percentage of 30 percent. Using the gross profit method, what is ending
inventory?_______
3. Assuming a periodic inventory system is used, use the following information to answer
question(s) below:
April 1
Inventory
200 units
$3.00
April 6
Purchase
300
$3.40
April 13
Purchase
100
$3.60
April 20
Purchase
200
$3.90
April 25
Purchase
40
$4.20
Sold
620 units
o
o
o
Using LIFO, the cost assigned to ending inventory is______
Using FIFO, the cost assigned to ending inventory is______
Using the average-cost method, the cost assigned to ending inventory is_______
4. Assume a perpetual inventory system, use the following information to calculate ending
inventory and cost of goods sold on a:


LIFO basis
FIFO basis
May 1
Beginning Inventory
70 units @ $7
May 9
Purchases
30 units @ $8
May 17
Sales
25 units
May 22
Purchases
15 units @ $9
May 27
Sales
40 units
5. Study Company reported the following information related to inventory and sales:
Units
Unit Cost
Beginning Inventory
100
$7
Purchase #1
700
$10
Purchase #2
200
$12
Sales--700 units at $20 per unit
Compute the following amounts assuming a periodic inventory system:
Inventory Costing
Cost of
Revenue
Method
Goods Sold
Average Cost
FIFO
LIFO
Gross
Margin
Balance Sheet
Inventory
6. Rene Company uses the perpetual inventory system and the FIFO inventory costing method.
All purchases and sales were cash transactions. The records reflected the following for
November:
Units
Unit Cost
Beginning Inventory, November 1
100
$1.00
Purchase, November 6
200
$1.20
Sale, November 10 (at $2.40 per unit)
110
Purchase, November 14
100
Sale, November 29 (at $2.60 per unit)
170
$1.30
Determine the following amounts:
a. Goods Available for Sale
$....................
b. Ending Inventory
$
c. Cost of Goods Sold
$
Prepare the journal entries for November 6 and
d. November 10.
7. Prior to a fire that destroyed the inventory, Orange Company had inventory purchases during
the period of $80,000 and sales of $250,000. Orange began the period with $190,000 in
inventory. Orange's typical gross profit percentage is 20 percent. Inventory that cost $10,000
survived the fire. Calculate the inventory loss from the fire.________
8. Blue's Department Store had net retail sales of $620,000 during the current year. The
following additional information was obtained from the accounting records:
At Cost
At Retail
Beginning Inventory
$110,000
$190,000
Net Purchases
$338,000
$580,000
Freight In
$14,000
Estimate the company's ending inventory at cost using the retail inventory method.__________
Chapter 7 focused on determining and journalizing accounts receivable (sell,
collect, write off, or recover), notes receivable (AR rollover, accrue interest, or
pay note and interest at maturity), and making adjusting journal entry for bad
debts using either the % of Net Sales method or the Aging of AR method. Also
bank reconciliation.
Use the following to answer questions 1. - 4. Accounts Receivable shows a debit balance of
$50,000. The Allowance for Uncollectible Accounts has a credit balance of $1,000. Net Sales for
the year were $500,000. In the past 2% of sales has proven uncollectible, and an aging of
Accounts Receivable accounts results in an estimate of $13,500 of uncollectible accounts
receivable.
1. Using the percentage of net sales, the Allowance for Uncollectible Accounts balance (after
adjustment) would be__________.
2. Using the percentage of net sales method, Uncollectible Accounts Expense would be debited
for________.
3. Using the accounts receivable aging method, Uncollectible Accounts Expense would be
debited for__________.
4. Using the accounts receivable method, the Allowance for Uncollectible Accounts balance
(after adjustment) would be_________.
Use the following to answer questions 5.-8. Accounts Receivable shows a debit balance of
$25,000. The Allowance for Uncollectible Accounts has a debit balance of $1,500. Net Sales for
the year were $250,000. In the past 3% of sales has proven uncollectible, and an aging of
Accounts Receivable accounts results in an estimate of $10,000 of uncollectible accounts
receivable.
5. Using the percentage of net sales, the Allowance for Uncollectible Accounts balance (after
adjustment) would be__________.
6. Using the percentage of net sales method, Uncollectible Accounts Expense would be debited
for________.
7. Using the accounts receivable aging method, Uncollectible Accounts Expense would be
debited for__________.
8. Using the accounts receivable method, the Allowance for Uncollectible Accounts balance
(after adjustment) would be_________.
9. You received notice that Floyd Wessel, a customer of yours with an Accounts Receivable
balance of $200 has gone bankrupt and will not be making future payments. Assume you use the
allowance method, the journal entry you make is:
10. A note dated May 23 and due in 90 days would be due on_______________.
11. The interest on a 90 day, 12%, $3,000 note is_________________.
12. The maturity value of a 60 day, 9%, $1,000 note is________________.
Chapter 8 focused on determining and journalizing actual current liabilities
like payroll, sales tax, and notes payable AND estimating and journalizing
estimated current liabilities like income taxes and warranties.
1. On December 1, Gator Pizza borrowed $20,000 from the bank, issuing a 90 day, 15
percent note. Interest is in addition to the face value. Prepare Gator Pizza's December 1
entry. December 31 adjusting entry for accrued interest, and March 1 entry at maturity.
Assume reversing entries are not made.
2. On December 1, Alberta Pizza issued the bank a 90 day, 15 percent, $20,000 note upon
receiving a bank loan. The interest was discounted (withheld) by the bank in advance.
Prepare the December 1 entry, the December 31 adjusting entry for accrued interest, and
March 1 entry at maturity. Assume reversing entries are not made.
3. Courtney Brent, earns an hourly wage of $12. During the most recent week, she worked
40 hours, her federal withholding tax totaled $62, state tax withholding totaled $18, and
$3 was withheld for union dues. Assuming a 6.2% social security tax and a 1.45%
Medicare tax rate: (a) prepare the entry to record Courtney Brent's wages and related
liabilities. (b) prepare the entry to record the employer's payroll taxes. Assume FUTA is
.8% and SUTA is 5.4%. (c) prepare the entry to pay the payroll. Round amounts to the
nearest penny.
4. Prepare entries for the following (assume calendar-year accounting period).
1. December 1 gave a three month, 15% note for $4,000 to a supplier as an
extension of a past-due account.
2. December 31 Made a year-end adjustment for accrued interest.
3. March 1 Paid the note in full.
5. For which of the following taxes is there no ceiling on the amount of employee annual
earnings subject to the tax? SUTA; Federal income tax; FICA tax; or FUTA
6. The maturity value of a $50,000, 90 day, 10% note payable is___________
7. The cost of a product warranty should be included as an expense when? In the period of
the sale of the product; In the period of the collection of the cash from the sale of the
product; In the future period when the product is repaired or replaced; or In the future
period when the cost of repairing the product is paid.
8. The following data were provided by the detailed payroll records of Vandy Corporation
for the month of October: Salaries $20,000; Wages $15,000; Income taxes withheld
$7,350; Union dues $175. FICA tax rate is 7.65% (no employee had reached the
maximum). (a) Give the October 31 entry to record the payroll and the related employee
deductions. (b) Give the October 31 entry to record the employer's tax expense.