Question

1. Which of the following are similarities between a six-month note receivable and an account receivable? They both are:

Select one:

a. formal written contracts.

b. interest bearing.

c. current assets.

d. current liabilities.

2.

Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information:

Date ...................... Description......................# of units...........Cost per unit

January 1................Beginning inventory...............240......................$ 5

June 2.....................Purchase.................................90......................$ 4

November 5............Sales......................................260

What amounts would be reported as the cost of goods sold and ending inventory balances for the year?

Select one:

a. Cost of goods sold $1,280; Ending inventory $280

b. Cost of goods sold $1,380; Ending inventory $315

c. Cost of goods sold $1,210; Ending inventory $350

d. Cost of goods sold $1,300; Ending inventory $170

3.

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company’s adjusted trial balance.

Accounts Payable ...................... $6,000

Accounts Receivable...................25,000

Inventory..................................... 22,800

Advertising Expense....................19,000

Cost of Goods Sold....................145,000

Delivery Expense.......................... 7,400

Income Tax Expense......................2,000

Insurance Expense........................ 1,000

Rent Expense.............................. 17,600

Sales Revenue........................... 300,000

Sales Discounts............................. 9,600

Sales Returns & Allowances.........40,000

Net income would be:

Select one:

a. $59,400.

b. $58,400.

c. $67,900

d. $60,400.

Answer 1

1

They both are current assets.

Both Note receivable and an account receivable are classified as current assets.

Option C is correct

2
Cost of goods sold	1280	=(240*5)+(260-240)*4
Ending inventory	280	=(90-20)*4
Option A is correct

3
Sales Revenue	300000
Less: Sales Discounts	9600
Less: Sales Returns & Allowances	40000
Net sales		250400
Expenses:
Advertising Expense	19000
Cost of Goods Sold	145000
Delivery Expense	7400
Income Tax Expense	2000
Insurance Expense.	1000
Rent Expense	17600
Total expenses		192000
Net income		58400
Option B is correct