QUESTION 19 Question Completion Status Best Pizza reports net sales of $1,000,00
ID: 2548078 • Letter: Q
Question
QUESTION 19 Question Completion Status Best Pizza reports net sales of $1,000,000, gross profit of $550,000, and net income of $80,000. The company's cost of goods sold is: A $450,000 B. $550,000 CS370,000 Some other amount QUESTION 20 If a 10%, 60-day note receivable is acquired from a customer in settlement of an existing account receivable of $18,000, the accounting entry for acquisition of the note will A Include a debit to Notes Receivable for $18,300 B. Include a credit to Interest Revenue for $300 Include a debit to Interest Expense for $1,800 D. Include a debit to Notes Receivable for $19,800 E None of the above QUESTION 21 At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Jim Corporation showed a credit balance of $2,000. An aging of the accounts receivable indicated the amount probably uncollectible to be $10,000. Under these circumstances, a year- end adjusting entry for estimated bad debts would include a: A Credit to the Allowance for Doubtful Accounts for $8,000 8. Debit to Bad Debts Expense of $10,000 Debit to Bad Debts Expense of $12,000 DDebit to the Allowance for Doubtful Accounts for $2,000 E. None of the above QUESTION 22 During January, Gus Corporation had sales of $80,000 and a cost of goods available for sale of $160,000. The company consistently eans a gross profi rate of 60%. Using the gross profit method, the estimated inventory at January 31 amounts 1 x A $112,000 $48.000 C.$128,000 $32.000 . QUESTION 23 The account "Bad Debts Expense" would show up on the inancial statements as: A contra-revenue account on the income staternent. B An owners equity account on the balance sheet. CA contra-purchases account on the inoome statement DAn expense account included in the "operating expenses" section of the income statement. E. A contra asset account on the balance sheet. QUESTION 24 Stors Corp. had accounts roceivable of $400,000 and an allowance for doubtful accounts of $17,000 st before wrting off as worthless an account receivable from Bil Company of $2,400. The values of the gross accounts receivable before and after the write-off were A $383.000 betore and $383,000 ar B. $400.000 betore and $397600 atter $417.000 before and $414,600 after D. $383.000 before and $380600 afterExplanation / Answer
19. Answer: a. $450000
Gross profit = Sales - Cost of goods sold
$550000 = $1000000 - cost of goods sold
Cost of goods sold = $450000.
20. Answer : E. None of above
Debit of notes receivable $18000
Interest is not included.
22. Answer : C. $128000
Sales $80000
Gross profit rate 60%
Gross profit = $80000 * 60%
= $48000
Cost of goods sold = $80000 - $48000
= $32000
Ending inventory = Cost of goods available for sale - Cost of goods sold
= $160000 - $32000
= $128000.
23. Answer : D.
Bad debts expense is a expense is included in operating expense of income statement, not recorded in balance sheet.