28. When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when
Answer
| a. | a sale is made. | |
| b. | management estimates the amount of uncollectibles. | |
| c. | an account becomes bad and is written off. | |
| d. | a customer’s account becomes past due. |
29. Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:
| Sep. 1 | Inventory | 20 units at $20 |
| 4 | Sold | 10 units |
| 10 | Purchased | 30 units at $25 |
| 17 | Sold | 20 units |
| 30 | Purchased | 10 units at $30 |
If Addison uses FIFO, the cost of the ending merchandise inventory on September 30 is Answer
| a. | $650 | |
| b. | $750 | |
| c. | $700 | |
| d. | $800 |
30.
Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:
| Sep. 1 | Inventory | 20 units at $20 |
| 4 | Sold | 10 units |
| 10 | Purchased | 30 units at $25 |
| 17 | Sold | 20 units |
| 30 | Purchased | 10 units at $30 |
If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is Answer
| a. | $750 | |
| b. | $700 | |
| c. | $800 | |
| d. | $650 |
31. Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a
Answer
| a. | debit to Allowance for Doubtful Accounts | |
| b. | debit to Accounts Receivable | |
| c. | credit to Accounts Receivable | |
| d. | credit to Bad Debt Expense |
32. Journal entries based on the bank reconciliation are required in the company’s accounts for
Answer
| a. | bank errors | |
| b. | outstanding checks | |
| c. | deposits in transit | |
| d. | book errors |
33.
The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be Answer
| a. | Cash 7,200 Merchandise Inventory 7,200 Cost of Merchandise Sold 3,950 | |
| b. | Cash 7,200 Sales 7,200 Cost of Merchandise Sold 3,950 | |
| c. | Cash 7,200 Sales 7,200 Cost of Merchandise Sold 7,200 | |
| d. | Cash 3,950 Sales 3,950 Cost of Merchandise Sold 3,950 |
34. The entry to record the return of merchandise from a customer would include a
Answer
| a. | credit to Sales | |
| b. | debit to Sales | |
| c. | debit to Sales Returns and Allowances | |
| d. | credit to Sales returns and Allowances |
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