DONALD RUDDY COMPANY Adjusted Account Balances For the Year Ended December 31, 20XX Accounts Payable $ 5,060 Accounts Receivable 5,340 Accumulated Depreciation—Office Equipment 400 Advertising Expense 210 Allowance for Doubtful

DONALD RUDDY COMPANY Adjusted Account Balances For the Year Ended December 31, 20XX Accounts Payable $ 5,060 Accounts Receivable 5,340 Accumulated Depreciation—Office Equipment 400 Advertising Expense 210 Allowance for Doubtful Accounts 300 Cash 7,170 Depreciation Expense—Office Equipment 200 Insurance Expense 140 Merchandise Inventory, January 1, 20XX 5,000 Notes Payable 1,000 Office Equipment 2,000 Office Supplies 90 Office Supplies Expense 210 Prepaid Insurance 190 Purchases 40,000 Purchase Discounts 170 Purchase Returns and Allowances 500 Rent Expense 1,500 Ruddy, Capital 4,100 Ruddy, Drawing 250 Salaries Expense 8,055 Salaries Payable 550 Sales 60,380 Sales Discounts 200 Sales Returns and Allowances 350 Taxes Payable 420 Transportation-in 250 Utilities Expense 385 Vehicle 1,340 Note: The ending merchandise inventory on December 31, 20XX, was $3,000. 1. The cost of goods sold is A. $44,580. C. $38,580. B. $41,580. D. $33,580. 2. The net cost of purchases are A. $39,080. C. $39,750. B. $39,580. D. $39,830. 3. The cost of goods available for sale is A. $39,080. C. $41,580. B. $39,330. D. $44,580. 4. Net sales for the period amount to A. $59,830. C. $60,380. B. $60,180. D. $60,930. 5. are the total operating expenses? A. $10,105 C. $10,700 B. $10,490 D. $11,000 A trial balance as of December 31, 20XX, for the Sylvia Goody Company is entered on the work sheet at the back of this unit. Additional data: a. Increase in allowance for doubtful accounts $ 113 b. Interest accrued on notes receivable 24 c. Depreciation on equipment 320 d. Expired insurance 126 e. Store supplies on hand 85 f. Interest accrued on notes payable 36 g. Salaries accrued but not paid 340 h. Merchandise Inventory, December 31, 20XX 7,220 6. On the work sheet prepared for the Sylvia Goody Company as of December 31, the debit total under Adjustments is A. $1,039. C. $926. B. $1,015. D. $913. 7. Which one of the following statements is true for the ending inventory balance? A. It will appear as a debit in the Trial Balance column. B. It will appear as a debit in the Adjusted Trial Balance column. C. It will appear as a credit in the Balance Sheet column. D. It will appear as a credit in the Income Statement column. 8. Which one of the following statements applies to the $714 in the Transportation-in account? A. It will appear in the debit column of the Income Statement. B. It will appear in the credit column of the Income Statement. C. It will appear in the debit column of the Balance Sheet. D. It will appear in the credit column of the Balance Sheet. 9. The cost of goods purchased that would appear on a formal income statement prepared for the Sylvia Goody Company, based on the information in the work sheet, would be A. $20,939. C. $20,221. B. $20,423. D. $19,709. 10. The net income for the Sylvia Goody Company for the period ending December 31, 20XX, is A. $10,382. C. $11,120. B. $10,406. D. $14,206. 11. When a firm is using a periodic inventory procedure, the cost of goods purchased is equal to A. Beginning Inventory + Purchases – Purchase Returns and Allowances – Purchase Discounts + Transportation-in. B. Ending Inventory + Purchases – Purchase Returns and Allowances – Purchase Discounts + Transportation-in. C. Purchases – Purchase Returns and Allowances – Purchase Discounts + Transportation-in. D. Purchases – Purchase Returns and Allowances – Purchase Discounts – Transportation-in. 12. An example of a contra-revenue account found on the Income Statement is the A. Uncollectible Accounts Expense. B. Transportation-in. C. Purchase Returns and Allowances. D. Sales Returns and Allowances. 13. Company A records purchases using the net price method. If an item is purchased from a supplier for $800 on terms of 3/10, n/30, the correct accounting entry would be A. Purchases 776 Purchase Discounts 24 Accounts Payable 800 B. Purchases 776 Accounts Payable 776 C. Accounts Payable 800 Purchases 776 Purchase Discounts 24 D. Purchases 800 Accounts Payable 800 14. account will be debited to record an accounts receivable amount considered to be a bad debt if the direct write-off method of accounting is used? A. Uncollectible Accounts Expense B. Cash C. Allowance for Doubtful Accounts D. Sales Here’s a partial record of the J. Shafer Company as of December 31, 20XX. Purchase Returns $ 1,500 Sales Discounts 900 Operating Expenses 20,000 Transportation-in 1,100 Ending Inventory 7,400 Sales 53,500 Beginning Inventory 9,500 Purchases 27,200 15. The cost of goods sold is A. $37,800. C. $29,800. B. $36,700. D. $28,900. 16. The company’s net income is A. $17,400. C. $4,600. B. $16,800. D. $3,700. 17. The term used to designate that the buyer of merchandise is responsible for the transportation costs of shipping the merchandise is A. E.O.M. shipping point. C. E.O.M. destination. B. F.O.B. shipping point. D. F.O.B. destination. 18. Gross profit on sales minus operating expenses equals A. net operating income. C. net sales. B. cost of goods sold. D. net operating expenses. 19. The following information about the Wells Company’s merchandising accounts is available: Beginning Inventory . . . . . . . . . . . . $100,000 Ending Inventory. . . . . . . . . . . . . . . 40,000 Purchase Discounts . . . . . . . . . . . . . 4,000 Transportation-in . . . . . . . . . . . . . . . 7,500 Purchases. . . . . . . . . . . . . . . . . . . . 55,000 Cost of Goods Sold . . . . . . . . . . . . . 115,000 The information on Purchase Returns and Allowances has been misplaced, and it’s up to you to determine its final balance from the information given above. The amount of Purchase Returns and Allowances must be A. $3,500. C. $11,000. B. $7,500. D. $15,000. 20. All but one of the following accounts would be credited in the closing process. Which account would not be credited in the closing entries? A. Sales Discounts B. Purchases C. Transportation-in D. Purchase Returns and Allowances

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