Question

Answer the following questions

1. Purchase Discounts Lost should be:
A. Added to the Merchandise Inventory account to determine the cost of inventory on hand
B. Considered a loss account to be reported on the income statement
C. Included on the income statement as a financing expense for the period
D. Part of the cost of goods sold

2. Orleans Enterprises purchased $37,500 of merchandise on account, terms 2/10, n/30. Assuming Orleans uses the net price method to account for purchase discounts, the journal entry to record the purchase would include a:
A. Debit to Inventory for $37,500
B. Credit to Accounts Payable for $36,750
C. Credit to Cash for $36,750
D. Debit to Purchase Discounts Lost for $750

3. Hurricane Enterprises purchased $4,000 of merchandise on account, terms 2/10, n/30. Assuming Hurricane uses the gross price method to account for purchase discounts and it pays for the merchandise on the 9th day after the invoice date, which of the following would not be used in either the acquisition of the merchandise or the payment of the invoice :
A. Credit to Cash for $3,920
B. Credit to purchase discount for $80
C. Debit to Accounts Payable for $3,920
D. Debit to Purchase $4,000

4. Bonita Industries purchased $5,000 of merchandise on account for resale purposes. Bonita plans to sell the merchandise for $7,500. If Bonita returned $1,000 of merchandise for credit, the journal entry to record the return would include a:
A. Debit to Accounts Payable for $1,000
B. Credit to Inventory for $1,500
C. Debit to Sales for $1,500
D. Credit to Cash for $1,000

5. Kinsey Company had beginning inventory of $50,000, ending inventory of $54,000 and cost of goods sold of $240,000. What was the cost of goods purchased?
A. $294,000
B. $290,000
C. $244,000
D. $236,000

6. The journal entry to record depreciation on production equipment would include a:
A. Debit to Accumulated Depreciation - Equipment
B. Credit to Work-in-Process Inventory
C. Debit to Manufacturing Overhead
D. Credit to Cash

7. Overapplied manufacturing overhead exists when:
A. There is a debit balance in the manufacturing overhead account at the end of the period
B. Actual manufacturing overhead is less than applied manufacturing overhead
C. The products manufactured during a period are undercosted
D. Applied overhead is larger that direct labor

8. The journal entry to record the completion and transfer of the cost of goods manufactured includes a:
A. Debit to Cost of Goods Sold
B. Debit to Manufacturing Overhead
C. Credit to Finished Goods Inventory
D. Credit to Work-in-Process Inventory

9. The entry to close out a small amount of over applied manufacturing overhead would:
A. Decrease the cost of goods manufactured
B. Decrease finished goods inventory
C. Increase cost of goods sold
D. Increase net income

10. The direct materials price variance is calculated as:
A. (Standard Price - Actual Price) x Standard Quantity Allowed
B. (Actual Price - Standard Price) x Actual Quantity Purchased
C. (Standard Quantity Allowed - Actual Quantity Purchased) x Actual Price
D. (Actual Quantity Purchased - Standard Quantity Allowed) x Standard Price

11.– 15. Use either the gross method or net method to record the following transactions, 10% extra credit if you use both methods.
10/1 Purchased $5,000 of tables on account the terms of payment are 1/15n30
10/5 Returned $1,000 of tables to the supplier
10/14 Paid $3,000 of the balance due on the account
10/30 Paid the remaining balance due on the account

16. – 20. Determine the material price and usage variances for the month of October
Direct material 3.0 pounds per unit at $5.00 per pound
Units produced 6,000
Units sold 5,500
Material purchased 20,000 pounds $102,000
Material used 17,500 pounds

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1. The answer is option B.
2. The answer is option B.
3. The answer is option C.
4. The answer is option A....

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