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Unit 3 Challenge 1 Bierman's, a local department store, sold a range of products. Yesterday, an order arrived for the appliance center. 300 ovens, purchased at a cost of $200 each, were distributed among 8 stores. 200 were sold for $300 each across all stores. The cost of goods sold totals __________.
A.) $90,000
B.) $40,000
C.) $20,000
D.) $60,000
Milton's Tool and Tile sells a range of products. This week, the shipping department received 500 gallons of paint, purchased at a cost of $20 each, which were distributed among 18 stores. 420 were sold for $30 each across all stores. The cost of goods sold equals ___________.
A.) $15,000
B.) $8,400
C.) $10,000
D.) $2,600
Clover Hardware sold a range of products. A few weeks ago, orders arrived for the garden center and outdoor living areas. 500 grills, purchased at a cost of $75 each, were distributed among 10 locations. 200 were sold for $175 each across all locations. The cost of goods sold totals __________.
A.) $37,500
B.) $35,000
C.) $2,500
D.) $15,000
Paulsen Hardware offered a discount to customers who used the store credit card to purchase lumber. If a customer paid his or her bill in full within 30 days of a lumber purchase, 5% was deducted from the invoice amount, to be used as store credit on the customer’s next purchase. A frequent customer of the Paulsen Hardware store, George, bought $25,000 worth of lumber using his store credit card. George paid his balance in full 27 days after making the purchase. $1,250 would be recorded in the __________.
A.) sales discount account
B.) sales account
C.) purchase account
D.) purchase discount account
Carson Hardware offers a discount to customers who use the store credit card on purchases of building materials. When customers pay their bill in full within 15 days of a purchase, 2% can be deducted from the invoice amount, to be used as store credit on their next purchase. A frequent customer of the Pleasantville Carson Hardware store, Moira, used her store credit card to buy 20 interior doors for $125 each. Moira paid her balance in full 10 days after the purchase. Mike will record $50 in the __________.
A.) purchases discount account
B.) sales discount account
C.) sales account
D.) purchases account
Throughout September, Taylor Hardware offered a discount to customers who used their store credit card on paint purchases. When customers paid their bill in full within 30 days of a paint purchase, 10% was deducted from the invoice amount, to be used as store credit on their next purchase. Louise is a building painter who purchased $7,500 worth of paint using her Taylor Hardware credit card. Louise paid her balance in full 29 days after the purchase. $7,500 is recorded in the __________.
A.) sales discount account
B.) purchase discount account,
C.) purchase account
D.)
sales account The shipment Sally ordered for the summer collection at her clothing store arrived. As she reviewed the shipment, she referred to her expanded income statement below.
The Goods Available for Sale total is __________.
A.) $154,000
B.) $164,000
C.) $182,000
D.) $107,000
After Kyle completed the closing process, he looked forward to preparing his financial statements. He reviewed the accounts and began collecting the information for the expanded income statement.
The Goods Available for Sale total is __________.
A.) $113,000
B.) $121,000
C.) $27,000
D.) $59,000
The shipment Frederick ordered for the paint department at his hardware store arrived. As he checked the shipment, he referred to his expanded income statement below.
The Goods Available for Sale total is __________.
A.) $97,000
B.) $43,000
C.) $69,000
D.) $11,000
Mark reviewed the following expanded income statement to ensure that all accounts were accurate and up to date.
Based on the portion of an expanded income statement below, the Total Cost of Goods Sold is __________.
A.) $47,525
B.) $26,700
C.) $46,825
D.) $20,825
Kelly reviewed the following expanded income statement to ensure that all accounts were accurate and up to date.
Based on the portion of an expanded income statement below, the Total Cost of Goods Sold is __________.
A.) $82,990
B.) $38,745
C.) $78,245
D.) $68,745
Ryan reviewed the following expanded income statement to ensure that all accounts were accurate and up to date.
Based on the portion of an expanded income statement below, the Total Cost of Goods Sold is __________.
A.) $59,725
B.) $60,725
C.) $127,225
D.) $14,525
Shauna calculated the net sales for her company using the following figures: Gross sales = $72,900 Sales discounts = $2,450 Purchase returns and allowances = $3,750 Sales returns and allowances = $2,550 The net sales of Shauna's company are __________.
A.) $67,900
B.) $71,650
C.) $64,150
D.) $69,150
Paula calculated the net sales for her company using the following figures: Gross sales = $75,000 Discounts = $3,500 Freight in = $4,500 Sales returns and allowances = $6,750 The net sales of Paula's company are __________.
A.) $60,250
B.) $68,250
C.) $69,250
D.) $64,750
Mike calculated the net sales for his company using the following figures: Gross sales = $50,000 Discounts = $1,800 Freight in = $2,750 Sales returns and allowances = $4,380 The net sales of the company are __________.
A.) $41,070
B.) $49,830
C.) $46,570
D.) $43,820
The reason for subsidiary ledgers is to collect data on customers purchasing habits and to see repeat customers __________.
A.) expenses
B.) purchasing habits
C.) accounts
D.) cash transactions
Sally owns a clothing company and found that she was selling more items, and a greater variety of items, to repeat customers. Sally's CPA advised her to create a set of accounts to separately track what each of her customers bought from her. To track her customers' purchases, Sally should set up and use a(n) __________.
A.) inventory account
B.) sales subsidiary ledger
C.)
purchases subsidiary ledger
D.) merchandising account
Which of the following descriptions is a benefit of having a subsidiary ledger?
A.) Tracking the customers' cash transactions
B.) Tracking the spending habits of frequent customers
C.) Using customers' addresses to determine payment terms
D.) Using customers' credit report scores to determine interest rates
Why are merchandising accounts closed?
A.) To set the permanent accounts to open
B.) To set the temporary accounts to open
C.) To set the permanent accounts to zero
D.) To set the temporary accounts to zero
The acronym used for the closing procedures of a merchandising company is:
A.) (P) Purchases (R) Revenues (E) Expenses
(D) Drawings (I) Income Summary
B.) (M) Merchandise (R) Revenues (E) Expenses (D) Drawings (I) Income Summary
C.) (R) Revenues (E) Expenses (D) Drawings (I) Income Summary
D.) (R) Revenues (E) Expenses (D) Drawings (I) Income Summary (M) Merchandise
Freight in is closed with a ________ because it has a natural ________ balance.
A.) credit; credit
B.) debit; debit
C.) debit; credit
D.) credit; debit
Which of the following accounts are closed to Income Summary with a debit entry?
A.) Sales Returns and Allowances
B.) Sales Discounts
C.) Purchase Returns and Allowances
D.) Freight In
Which of the following merchandise accounts are closed with a debit to Income Summary?
A.) Purchase Discounts
B.) Sales Discounts
C.) Sales Returns and Allowances
D.) Purchases
Which of the following accounts are closed with a credit to Income Summary?
A.) Purchase returns and allowances, purchase discounts and purchases
B.) Sales returns and allowances, sales discounts and purchases
C.) Sales returns and allowances, sales discounts and sales
D.) Purchase returns and allowances, purchase discounts and sales
Unit 3 Challenge 2
How does the periodic inventory accounting method track inventory and cost of goods sold?
A.) Calculates the current inventory and cost of goods sold in real time
B.) Calculates the current inventory and cost of goods sold at the end of the period
C.) Calculates the current inventory and cost of goods sold in the middle of the period
D.) Calculates the current inventory and cost of goods sold at the beginning of the period
Which of the following businesses would most likely use the perpetual inventory method?
A.) Yacht store
B.) Butcher shop
C.) Jewelry store
D.) Car dealership
Under the periodic inventory system, the merchandise inventory account balance is the __________.
A.) most recent computer update
B.) most recent inventory sale
C.) most recent inventory purchase
D.) most recent physical inventory
Using the FIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $3,480 Cost of Goods Sold: $13,240
B.) Units on Hand: $3,320 Cost of Goods Sold: $13,400
C.) Units on Hand: $3,180 Cost of Goods Sold: $13,540
D.) Units on Hand: $3,300 Cost of Goods Sold: $13,420
Using the FIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $18 Cost of Goods Sold: $166
B.) Units on Hand: $36 Cost of Goods Sold: $148
C.) Units on Hand: $24 Cost of Goods Sold: $160
D.) Units on Hand: $30 Cost of Goods Sold: $154
Using the FIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $7,410 Cost of Goods Sold: $15,000
B.) Units on Hand: $6,935 Cost of Goods Sold: $15,475
C.) Units on Hand: $7,220 Cost of Goods Sold: $15,190
D.) Units on Hand: $6,980 Cost of Goods Sold: $15,430
Using the LIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $1,750 Cost of Goods Sold: $1,925
B.) Units on Hand: $1,250 Cost of Goods Sold: $2,425
C.) Units on Hand: $1,350 Cost of Goods Sold: $2,325
D.)
Units on Hand: $1,500 Cost of Goods Sold: $2,125 Using the LIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $2,150 Cost of Goods Sold: $5,830
B.) Units on Hand: $1,400 Cost of Goods Sold: $6,580
C.) Units on Hand: $2,050 Cost of Goods Sold: $5,930
D.) Units on Hand: $2,100 Cost of Goods Sold: $5,880
Using the LIFO method and the information in this image, what is the Cost of Units on Hand and Cost of Goods Sold during this period?
A.) Units on Hand: $3,120 Cost of Goods Sold: $14,480
B.) Units on Hand: $3,600 Cost of Goods Sold: $14,000
C.) Units on Hand: $3,520 Cost of Goods Sold: $14,080
D.) Units on Hand: $3,840 Cost of Goods Sold: $13,760
Taylor owns a boutique and needed to compute her inventory of all the scarves and jackets. She had 35 scarves on the floor and five in the storeroom. She had 15 jackets on the floor and eight more in the storeroom. Sally purchased each scarf for $28 and each jacket for $95. The weighted average unit cost of scarves and jackets being sold is __________.
A.) $61.50
B.) $54.63
C.) $48.70
D.) $52.46
Michael owns a hair salon and needed to compute his inventory. He had 750 hair brushes on the floor and another 400 in the storeroom. He also had 25 hair dryers on the floor and 10 in the storeroom. Each hair brush costs $9 and each hair dryer costs $300. Using the weighted average cost method, the cost of each item being sold is _________.
A.) $17.59
B.) $9.13
C.) $295.71
D.) $154.50
Wanda owns a book store and needed to compute her inventory. She had 600 books on the floor and another 300 in the storeroom. She also had 45 electronic readers on the floor and 25 in the storeroom. Each book costs $15 and each electronic reader costs $250.
Using the weighted average cost method, the cost of each item being sold is __________.
A.) $132.50
B.) $19.44
C.) $31.96
D.) $192.86
Which of the following descriptions corresponds with the weighted average inventory valuation method?
A.) Inventory purchased first has a greater weight than inventory purchased later
B.) Matches cost of items purchased against cost of items in inventory
C.) Tends to be used for inventories of large, unique items
D.) Disregards when inventory was purchased
Which of the following descriptions corresponds with the LIFO inventory valuation method?
A.) Works best when inventory items are identical and intermingled
B.)
Earliest goods purchased remain in inventory
C.) Practical for businesses that have very low inventory
D.) The first goods purchased are the first to be sold
Which of the following statements describes the FIFO inventory valuation method?
A.) It doesn't matter when the items are bought or sold because the cost is averaged.
B.) The goods are assumed to be sold over time from oldest to newest.
C.) The goods purchased last week are sold before the goods purchased last month.
D.) The goods purchased last month are sold after the goods purchased this month.
Which inventory method is being used when the natural flow of goods is followed?
A.) FIFO
B.) Specific ID
C.) LIFO
D.) Weighted average
Weighted average cost per unit is determined by __________ the cost of goods available for sale by the __________ after each purchase.
A.) dividing; number of units in inventory
B.) multiplying; number of units purchased
C.) dividing; number of units purchased
D.) multiplying; number of units in inventory
Under LIFO inventory method, when would a business sell the newest inventory?
A.) Newest inventory is sold last.
B.) Date of purchase does not matter for this method.
C.) Newest inventory is sold in the middle of the period.
D.) Newest inventory is sold first.
Which of the following accounts would the income statement of a merchandise and service company contain?
A.) Sales and Purchase Discounts
B.) Sales and Cost of Goods Sold
C.) Sales and Inventory
D.) Sales and Unearned Revenue
The financial statements of a merchandise company are intertwined in the following manner:
A.) Income Statement > Net Income > Statement of Changes in Owner’s Equity > Balance Sheet > Ending Capital
B.) Income Statement > Net Income > Ending Capital > Balance Sheet
C.) Income Statement > Ending Capital > Balance Sheet > Ending Capital
D.) Income Statement > Net Income > Statement of Changes in Owner’s Equity > Balance Sheet
Which of the following accounts would the financial statement of a merchandise company include, but a service company would not?
A.) Accounts Receivable and Inventory
B.) Inventory and Unearned Revenue
C.) Inventory and Cost of Goods Sold
D.) Assets and Liabilities
Given the information provided in this illustration, what are the gross profit and gross margin ratio?
A.)
Gross Profit: $67,800 Gross Margin Ratio: 15%
B.) Gross Profit: $72,100 Gross Margin Ratio: 16%
C.) Gross Profit: $379,600 Gross Margin Ratio: 82%
D.) Gross Profit: $383,900 Gross Margin Ratio: 85%
Given the information provided in this illustration, what are the gross profit and gross margin ratio?
A.) Gross Profit: $194,325 Gross Margin Ratio: 83%
B.) Gross Profit: $266,675 Gross Margin Ratio: 85%
C.) Gross Profit: $275,675 Gross Margin Ratio: 86%
D.) Gross Profit: $185,325 Gross Margin Ratio: 82%
Given the information provided in this illustration, what are the gross profit and gross margin ratio?
A.) Gross Profit: $718,400 Gross Margin Ratio: 81%
B.) Gross Profit: $1,055,400 Gross Margin Ratio: 84%
C.) Gross Profit: $846,800 Gross Margin Ratio: 91%
D.) Gross Profit: $758,500 Gross Margin Ratio: 82%
During the past six months, Roberta sold goods costing $35,500, her expenses totaled $2,500 and her freight in totaled $750. Her company's average stock of goods during the same period was $9,500. The inventory turnover ratio for Roberta's company is __________.
A.) 3.74
B.) 3.55
C.) 3.47
D.) 3.39
During the year that ended December 31, Clarissa sold goods that cost $67,800, her expenses totaled $8,125 and her freight-in totaled $4,800. Her company's average stock of goods during the same period was $13,432. Clarissa's company's inventory turnover ratio is __________.
A.) 4.80
B.)
5.05
C.) 4.44
D.) 4.09
During the past six months, Ben sold goods that cost $43,500, his expenses totaled $3,500 and his freight in totaled $1,750. His company's average stock of goods during the same period was $12,400. The inventory turnover ratio for Ben's company is __________.
A.) 3.93
B.) 3.51
C.) 3.08
D.) 3.37