Question

3.

Samson Co. sold $4,000 of goods to Ramsey Co. on account. Ramsey later returned $500 of the goods purchased from Samson. Upon receipt of the returned merchandise, Samson should record a

		a. debit to Sales Returns and Allowances for $500.
		b. debit to Accounts Receivable for $500.
		c. debit to Cash for $500.
		d. credit to Sales for $500.

4.

Use the following information for this question:

                   June 1                 Inventory 100 @ $1.00

                            6                 Purchased 150 @ $1.10

                          13                 Purchased   50 @ $1.20

                          20                 Purchased 100 @ $1.30

                          25                 Purchased   25 @ $1.40                                                              

                           Total Units Sold in June: 300 units

Using the last-in, first-out (LIFO) method, the COST OF GOODS SOLD is

		a. $362.50
		b. $127.50
		c. $325
		d. $165

5.

Which of the following is not correct according to the accounting rules for when to record revenues and expenses?

		a. Recording revenue upon performance of a service that the customer paid for in advance
		b. Recording revenue upon receipt of payment for services performed in a prior accounting period
		c. Adjusting prepaid expenses at the end of the month for the portion that has expired during the month
		d. Recording Interest Expense at the end of the month for the month's accrued interest on corporate debt

6.

On January 1, Sonar Corporation issued 20-year bonds payable with a face value of $1,000,000 and a payment (face) rate of 8%, with interest payments made semiannually. At the time the bonds were issued, the market interest rate for bonds of similar risk was 10%, compounded semiannually. Which table, rate, and number of periods would be used to find the present value of the semiannual interest payments?

		a. PV Single, 5%, 40 periods
		b. PV Annuity, 5%, 20 periods
		c. PV Annuity, 10%, 20 periods
		d. PV Annuity, 5%, 40 periods

Answer 1

Q3.
Answer is a. Debit to Sales return and allowance $ 500.
Explanation:
Goods returned by customer will be debited to sales return account
And the balance of Accounts receivable will be reduced by crediting the account.
Q4.
Answer is a. $ 362.50
explanation:
Cost of goods sold:
Sale from June 25 purchase	(25*1.40)	35
Sale from June 20 purchase	(100*1.30)	130
Sale from June 13 purchase	(50*1.20)	60
Sale from June 6 purchase	(125*1.10)	137.5
Total cost of goods sold		362.5
Q5.
Answer is c. Adjusting prepaid expense at the end of month for portion that has expired during the month
Q6.
Answer is d. PV Annuity, 5%, 40 periods