Accounting Systems

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1. The production budget shows expected unit sales are 10,000. The required production units are 10,400. What are the beginning and desired ending finished goods units, respectively?

 

	Beginning Units	Ending Units
a.	1,000	600
b.	600	1,000
c.	400	1,000
d.	1,000	400

 

2. The following credit sales are budgeted by Evens Trading Company:

January                    $340,000
February                  $550,000
March                                   $600,000
April                                     $680,000

The company’s past experience indicates that 50% of the accounts receivable are collected in the month of sale, 30% in the month following the sale, and 18% in the second month following the sale. The anticipated cash inflow for the month of April is:

• $520,000
• $581,200
• $619,000
• $680,000

 

3. A $100 petty cash fund has cash of $18 and receipts of $80. The journal entry to replenish the account would include a credit to

• Cash for $82
• Petty Cash for $82
• Cash Over and Short for $2
• Cash for $80

 

 

4. The following information relates to ABC Accounts receivable balance as at 1/1/2010 and 31/12/2010 amounted to $550,000 and $340,000 respectively. Collections from debtors (accounts receivable) amounted to $ 480,000. Assuming ABC Ltd sells only on credit, the amount of credit sales for the year is:

 

1. $ 200,000
2. $ 210,000
3. $ 270,000
4. $ 480,000

 

5. When preparing the financial statements of Omega Ltd., the accountant found the following information. Opening balance of Retained Earnings $5,000; Interim dividends paid $1,000; Profit earned $16,000; Dividends declared $2,000. The closing balance of Retained Earnings for Omega Ltd., is

 

1. $24,000
2. $20,000
3. $18,000
4. $16,000

 

6. A company requires $1 million in sales to meet its target net profit. Its variable costs are 75% of selling price and the fixed costs are $150,000. What is the target net profit?

 

1. $600,000
2. $200,000
3. $100,000
4. $50,000

 

 

7. Dulcet Ltd is planning to sell 400,000 hammers for $ 1.50 per unit. The contribution margin ratio is 20%. If Dulcet Ltd will break even at this level of sales, what are the fixed costs?
   1. $ 120,000
   2. $ 280,000
   3. $ 400,000
   4. $ 480,000
8. Equipment was purchased for $15,000. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be
   460. $2,460.
   461. $2,400.
   462. $2,940.
   463. $3,540.

 

9. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 12,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation expense for the first full year, during which the equipment was used 3,300 hours?
   1. $37,500
   2. $40,000.
   3. $41,250.
   4. $42,500.

 

10. Textile Limited uses the allowance method for its bad debts. As at 1^st January 2011, it has a credit balance of $1,500 in the Allowance for Doubtful Debts account. The accounts receivable balance as at 31^st December 2011 is $500,000 of which 1% of the amount is estimated to be uncollected. What is the journal entry to record the allowance for doubtful debt as at 31^st December 2011?
    500. Debit Accounts Receivable $3,500, Credit Allowance for Doubtful Debts $3,500.
    501. Debit Allowance for Doubtful Debt $5,000, Credit Accounts Receivable $5,000.
    502. Debit Bad Debts $3,500, Credit Allowance for Doubtful Debts $3,500.
    503. Debit Bad Debts $5,000, Credit Accounts Receivable $5,000.

 

 

 

 

11. Bay Limited uses the allowance method for its bad debts. As at 31^st December 2011, the Allowance for Doubtful Debts account has a credit balance of $5,800 and the Accounts Receivable has a total balance of $400,000. The company has been told that customer Bill has been declared bankrupt and his debt of $3,000 is therefore uncollectable. What will the journal entry be to record the transaction relating to Bill?

 

800. Debit Accounts Receivable $8,800, Credit Allowance for Doubtful Debts $8,800.
801. Debit Allowance for Doubtful Debt $3,000, Credit Accounts Receivable $3,000.
802. Debit Bad Debts $3,000, Credit Allowance for Doubtful Debts $3,000
803. Debit Bad Debts $8,800, Credit Accounts Receivable $8,800.

12. A company budgeted unit sales of 51,000 units for January 2014 and 60,000 units for February 2014. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month’s budgeted unit sales. If there were 15,300 units of inventory on hand on 31 December 2013, how many units should be produced in January 2014 in order for the company to meet its goals?
    1. 53,700 units.
    2. 51,000 units.
    3. 48,300 units.
    4. 69,000 units.

 

13. The following information was taken from Smith Ltd’s cash budget for the month of July:
    1. Beginning cash balance $ 90,000
    2. Cash receipts $ 57,000

• Cash disbursements $ 102,000

If the company has a policy of maintaining a minimum end of the month cash balance of $75,000, the amount the company would have to borrow is

1. $30,000.
2. $15,000.
3. $45,000.
4. $18,000.

 

 

14. The following credit sales are budgeted by Roswell Company:
    1. January $34,000
    2. February 50,000

• March 70,000

1. April 60,000

The company’s past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is

720. $61,720.
721. $56,000.
722. $60,000.
723. $58,800.

 

15. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $100,000. The number of units the company must sell to break even is
    1. 50,000 units.
    2. 20,000 units.
    3. 200,000 units.
    4. 33,333 units.

 

16. Fixed costs are $600,000 and the variable costs are 75% of the unit selling price. The break-even point in dollars is
    1. $1,400,000.
    2. $1,800,000.
    3. $2,400,000
    4. $800,000