Question

Which of the following is considered part of the asset classification Long-Term Investments? A. B. C. D. A building housing a company's administrative activities. Cash equivalents. A sinking fund established to retire bonds payable maturing in 20 years. Securities classified as held-to-maturity that mature within the next 12 months. Which of the following events related to accounts receivable causes a decrease to total assets? B. C. D. A write-off of an account receivable. A collection of an account receivable. A collection of an account receivable after an earlier write-off. A reporting date adjusting entry to estimate bad debts. Pinson Co. has the following account balances at December 31, 2019, prior to any adjusting entry for bad debts: Accounts Receivable Allowance for Doubtful Accounts $1,350,000 8,000 (debit) Pinson estimates that 5% of the gross accounts receivable will not be collected. What amount should the company report as Bad Debt Expense for the year-ended December 31, 2019? A. B. $8,000. $59,500. D. $67,500 $75,500. Which of the following statements concerning inventory systems is true? A. If inventory purchase costs are rising over time, and the FIFO cost flow method is applied, the periodic and perpetual systems will produce the same figure for ending inventory. In a perpetual system, an inventory shortage is reflected as an unidentified component of the Cost of Goods Sold account. If inventory purchase costs are rising over time, and the LIFO cost flow method is applied, the periodic and perpetual systems will produce the same figure for ending inventory. In a periodic system, the Cost of Goods Sold account must be updated following each sale transaction. D.

Answer 1

1. C. A sinking fund established to retire bonds payable maturing in 20 years:

A falls under fixed asset; B&D are current assets

2. D. Reporting date adjusting entry to estimate bad debts

Entry for all three A,B&C affects only the Balance sheet items and hence no change in total asset value.

3. D $ 75,500

Bad Debt Account balance before adjustment entry - $ 8000 + $ 67,500 (i.e.) Current entry for 5% on $ 1,350,000

4. A. If inventory purchase cost are rising over time, and the FIFO cost flow method is applied, the periodic and perpetual systems will produce same figure for ending inventory.