1. An analysis and aging of accounts receivable of the Lucille Company at Decemb

1. An analysis and aging of accounts receivable of the Lucille Company at December 31 2007 showed the following:Accounts Receivable $840000Allowance for Doubtful Accounts(before adjustment) 36000 (cr)Accounts estimated to be uncollectible 76800Compute the net realizable value of the accounts receivable ofLucille Company at December 31 2007.A. $804000 C. $763200B. $799200 D. $727200My answer is B2. A new product introduced by Wilkenson Promotions carries a two-year warranty againstdefects. The estimated warranty costs related to dollar sales are as follows:Year of sale 3 percentYear after sale5 percentSales and actual warranty expenditures for the years ended December 31 2007 and2008 are as follows: S ales Actual Warranty Expenditures2007 $ 800000 $200002008 1000000 70000What amount should Wilkenson report as its estimated liability as of December 31 2008?A. $4000 C. $54000B. $24000 D. $74000My answer is C3. How should the balances of Progress Billings and Construction in Progress be shown at reporting dates prior to the completion of a long-term contract?A. Progress Billings as income Construction in Progress as inventoryB. Net as income from construction if credit balance and loss from construction if debitbalanceC. Progress Billings as deferred income Construction in Progress as a current assetD. Net as a current asset if debit balance and current liability if credit balanceMy answer is B4. Brown Construction Company uses the percentage-of-completion method for long-term construction contracts. A specific job was begun in 2007 and completed in 2009. The contract price was $1400000 and cost information as of each year-end is given below: 2007 2008 2009End of year estimated cost to complete $400000 $200000 $ 0Annual cost incurred 400000 400000 120000Assuming Brown correctly recorded gross profit in 2007 how much gross profit should thecompany record in 2008?A. $0 C. $300000B. $20000 D. $320000My answer is D5. On July 1 2007 ABC Corporation sold $20000 in factored receivables for $18350.Assume the allowance of bad debts to be $500. What is the loss from factoringreceivables?A. $500 C. $1650B. $1150 D. $2150My answer is A6. First Company sold merchandise on credit to Second Company for $1000 on July 1 with terms of 2/10 net /30. On July 6 Second returned $200 worth of merchandise claiming the materials were defective. On July 8 First received a payment from Second and creditedAccounts Receivable for $450. On July 24 Second Company paid the remaining balance on their account. What was the total cash received from Second during July?A. $441 C. $791B. $450 D. $800My answer is C7. When the allowance method of recognizing bad debt expense is used the entry to record the write-off of a specific uncollectible account would decreaseA. allowance for doubtful accounts.B. net income.C. net realizable value of accounts receivable.D. working capital.My answer is B8. Based on the aging of its accounts receivable at December 31 Pribob Companydetermined that the net realizable value of the receivables at that date is $760000.Additional information is as follows:Accounts Receivable at December 31 $ 880000Allowance for Doubtful Accounts at January 1 128000 (cr)Accounts written off as uncollectible during the year 88000Pribob?s doubtful accounts expense for the year ended December 31 isA. $80000. C. $120000.B. $96000. D. $160000.My answer is A9. Hillson Company began operations on January 1 2007 and appropriately uses theinstallment method of accounting. The following data are available for 2007 and 2008: 2007 2008Installment sales $1200000 $1500000Cash collections from:2007 sales 400000 5000002008 sales ? 600000Gross profit on sales 30% 40%The realized gross profit for 2008 isA. $240000. C. $440000.B. $390000. D. $600000.My answer is A10. Grant Company accepted a $400000 face value 6-month 10 percent note dated May 15 from a customer. On that same date Grant discounted the note at Eagle National Bank at a 12 percent discount rate. How much cash should Grant receive from the bank on May 15?A. $400000 C. $394800B. $396000 D. $387200My answer is D11. Lake Construction Company uses the completed-contract method for long-term construction contracts. The information for a specific contract as of January 1 2007 is shown below.Costs incurred to date $ 700000Contract price 2000000Estimated remaining cost to complete 800000$600000 of cost was incurred during 2007 and on December 31 2007 the estimatedremaining cost to complete was still $800000. The correct balance for the Construction in Progress at December 31 2007 isA. $600000. C. $1200000.B. $700000. D. $1300000.My answer is A12. In preparing the bank reconciliation of Crews Company for the month of July the following information is available:Balance per bank statement 7/31 $54075Deposits in transit 7/31 9375Outstanding checks 7/31 8625Deposit erroneously recorded by bank to Crews account 7/18 375Bank service charges for July 75What is the correct cash balance at July 31?A. $52875 C. $54450B. $54375 D. $54825My answer is B13. C & J Construction Inc. has consistently used the percentage-of-completion method of recognizing income. Last year C & J started work on a $4500000 construction contract which was completed this year. The accounting records disclosed the following data for last year:Progress billings $1650000Costs incurred 1350000Collections 1050000Estimated cost to complete 2700000How much income should C & J have recognized on this contract last year?A. $105000 C. $300000B. $150000 D. $350000My answer is B14. Under which approach does a company record all earnings from a project to the current period even though only a percentage of these earnings were actually realized during this period?A. Proportional performance methodB. Cost-to-cost methodC. Efforts-expended methodD. Completed-contract methodMy answer is C15. On June 30 2007 Simon Company discounted a customer?s $180000 6-month 10 percent note receivable dated April 30 2007. A discount rate of 12 percent was charged by the bank. Simon?s proceeds from this discounted note would beA. $169200. C. $181440.B. $172800. D. $185220.My answer is D16. Lake Construction Company uses the percentage-of-completion method for long-term construction contracts. The company has a project with a contract price of $7000 on which $600 of gross profit has been recognized in prior years. Information for the current year is as follows:Total cost incurred through current year $5000Estimated costs remaining at end of current year 2800What is the loss that Lake should recognize in the current year?A. $600 C. $1400B. $800 D. No loss should be recognized.My answer is A17. On September 1 Riva Co. assigns specific receivables totaling $750000 to Pacific Bank as collateral on a $625000 12 percent note. Riva Co. will continue to collect the assigned accounts receivable. Pacific also assesses a 2 percent service charge on the total accounts receivable assigned. Riva Co. is to make monthly payments to Pacific with cash collected on assigned accounts receivable. Collections of assigned accounts during September totaled $260000 less cash discounts of $3500. What amount is owed to Pacific by Riva Co. for September collections plus accrued interest on the note toSeptember 30?A. $260000 C. $264000B. $262750 D. $266250My answer is B18. Richards Company uses the allowance method of accounting for bad debts. The followingsummary schedule was prepared from an aging of accounts receivable outstanding onDecember 31 of the current year.No. of Days Outstanding Amount Probability of Collection0?30 days $500000 . 9831?60 days 200000 . 90Over 60 days 100000 . 80The following additional information is available for the current year:Net credit sales for the year $4000000Allowance for Doubtful Accounts:Balance January 1 45000 (cr)Balance before adjustment December 31 2000 (dr)If Richards determines bad debt expense using 1.5 percent of net credit sales the netrealizable value of accounts receivable on the December 31 balance sheet will beA. $738000. C. $742000.B. $740000. D. $750000.My answer is B19. Assume a retail company makes a $5000 deposit of credit card receipts for sales made on Visa and MasterCard and that the bank charges a 4 percent service charge for sales on these cards. The company would debit cash forA. $0. C. $5000.B. $4800. D. $5200.My answer is C20. Jane likes to shop at The Gap upon occasion. Last week she bought a sweaterbecause it was just the right color to match another item in her wardrobe. Once shegot the sweater home it didn?t match at all. So Jane revisited her local Gap store toreturn the sweater. Which of the following indicates the account(s) that would beaffected by Jane?s return?A. Sales Return and Allowances and Cost of Goods SoldB. Accounts ReceivableC. Inventory and Sales ReturnD. Sales Return and Allowances Cost of Goods Sold Inventoryand Accounts ReceivableMy answer is C