Question

1.Given:

Overstated Understated Purchases Sales Returns Beginning Inventory Freight Out Purchase Discounts R 15

Net Income is:

Select one:

a. Understated $16

b. Understated $24

c. Overstated $6

d. Understated $26

e. Understated $10

2.

Case Corp. had accounts payable of $100,000 recorded in the general ledger as of December 31, 2012. The Accounts Payable balance included the following recorded purchases on credit:



In Case’s December 31, 2012 balance sheet, the accounts payable should be reported in the amount of:

Select one:

a. $125,000

b. $92,000

c. $121,000

d. $79,000

e. $75,000

3.

Use the following information for the month of May:

Assuming that a perpetual inventory system is used, what is Cost of Goods Sold on a LIFO basis?

Select one:

a. $2,880

b. $680

c. $1,280

d. $1,380

e. $1,400

Answer 1

1.

a.. understated $16.

overstating of purchase will understate the net income	7 understate
sales returns understated will overstate the income	5 overstate
beginning inventory under stated will over state the income	4 overstate
freight out overstated will understate the income	15 understate
purchase discount understate will understate the income	3 understate
net effect (25 under state- 9 overstate)	16 understate

2.

d.79,000.

initial amount	100,000
less: shipping date 2nd jan 2013 on terms FOB shipping point shall be included on that date	(12,000)
less:shipment date 31 december 2012 on terms FOB destination shall be included on the date received	(9,000)
amount to reported as accounts payable	79,000

3.

d.1,380.

cost of goods sold under LIFO;

may 18 sales = 25 units @$20 each (purchased on may 7) =>$500.

may 29 sales = 40 units @$22 each (purchased on may 22)=>880

total = 500+880=>1380.