ACCTG26 PRELIM PRETEST 1
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Brock Company reported operating expenses in two categories, namely distribution and general
and administrative.
The adjusted trial balance at year-end included the following expense and loss accounts for current year:
Accounting and legal fees
1,200,000
Advertising
1,500,000
Freight out
800,000
Interest
700,000
Loss on sale of long-term investment
Officers’ salaries
Rent for office space
Sales salaries and commissions
300,000
2,250,000
2,200,000
1,400,000
One-half of the rented premises is occpied by the sales department.
What amount should be reported as total distribution costs?
a. 4,800,000 c. 3,700,000
b. 4,000,000 d. 3,600,000
____ 2. Lee Company reported the following data for the current year:
Legal and audit fees
1,700,000
Rent for office space
2,400,000
Interest on inventory loan
2,100,000
Loss on abandoned data processing equipmetn 350,000
The office space is used equally by the sales and accounting departments.
What amount should be classified as general and administrative expenses?
a. 2,900,000 c. 4,100,000
b. 3,250,000 d. 5,000,000
____ 3. Griff Company reported the following data for the current year:
Accounting and legal fees
250,000
Freight in
1,750,000
Freight out
1,600,000
Officers’ salaries
1,500,000
Insurance
850,000
Sales representative salaries
Research and development expense
2,150,000
1,000,000
What amount should be reported as administrative expense?
a. 2,600,000 c. 4,350,000
b. 5,500,000 d. 3,600,000
____ 4. Dell Company provided the following information for the current year:
Purchases
5,300,000
Purchase discounts
100,000
Beginnings inventory
1,600,000
Ending inventory
2,150,000
Freight out
400,000
What is the cost of goods sold for the current year?
a. 4,650,000 c. 5,050,000
b. 4,750,000 d. 5,850,000
____ 5. Bart Company provided the following information for the current year:
Disbursements for purchases
5,800,000
Increase in tradde accounts payable
500,000
Decrease in merchandise inventory
200,000
What is the cost of goods sold for the current year?
a. 6,500,000 c. 5,500,000
b. 6,100,000 d. 5,100,000
____ 6. Hihligaynon Company provided the following information for the current year:
Beginning inventory
Freight in
Purchase returns
400,000
300,000
900,000
Ending inventory
500,000
Selling expenses
1,250,000
Sales discount
250,000
The cost of goods sold is six times the selling expenses.
hat is the amount of gross purchased?
a. 6,500,000 c. 8,000,000
b. 6,700,000 d. 8,200,000
____ 7. Bicolano Company provided the following data for the current year:
Inventory, January 1
2,000,000
Purchases
7,500,000
Purchase returns and allowance
Sales returns and allowances
500,000
750,000
Inventory on December 31
2,800,000
Gross profit rate on net sales
20%
What is the amount of gross sales for the current year?
a. 7,750,000 c. 7,000,000
b. 8,500,000 d. 9,125,000
____ 8. Carmela Company provided the following information for the current year:
Net sales
1,800,000
Freight in
45,000
Purchase discounts
25,000
Ending inventory
120,000
Gross margin on sales
20%
What is the of cost of goods available for sale?
a. 1,200,000 c. 1,080,000
b. 1,220,000 d. 960,000
____ 9. Jericho Company showed net income of P480,000 for the year. Selling expenses were equal to
15% of sales and also 25% of cost of goods sold. All other expenses were 13% of sales.
What is the gross profit for the year?
a. 4,000,000 c. 1,600,000
b. 2,400,000 d. 2,000,000
____ 10. Pearl Company reported income before tax of P5,000,000 for the current year. The auditor
questioned the following amount that had been included in income before tax:
Equity in earnings of Cinn Company - 40% interest 1,600,000
Dividend received from Cinn Company
320,000
Adjustment of profit of prior year
for arithmetical error in depreciation
Unrealized gain on equity investment at FVOVI
What amount should be reported as adjusted net income?
a. 3,400,000 c. 5,080,000
b. 4,680,000 d. 6,080,000
(1,400,000)
1,000,000