Question-1
Presented here are the components in Pedersen Company's income statement.
Determine the missing amounts.
Sales Cost of Goods Sold Gross Profit Operating Expenses Net Income
$71,200 (b) $30,000 (d) $10,800
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f)
Questio-2
Prior Company buys merchandise on account from Wood Company. The selling price of the goods is $900 and the cost of goods is $630. Both companies use perpetual inventory systems. Journalize the transactions on the books of both companies.
Question 3
In its first month of operation, Maze Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 150 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. The company uses the periodic method.
Phantom Profit $
Question 4
O'Connor Video Center accumulates the following cost and market data at December 31.
Inventory Categories Cost Data Market Data
Cameras $12,500 $13,400
Camcorders 9,000 9,500
DVD's 13,000 12,800
Compute the lower of cost or market valuation for O'Connor's inventory.
Question 5
Beaty Company has the following internal control procedures over cash receipts. Match the internal control principle that is applicable to each procedure.
Establishment of responsibility
Segregation of duties
Independent internal verification
Human resource controls
Physical controls
1. The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.
2. All over-the-counter receipts are registered on cash registers.
3. Only cashiers may operate cash registers.
4. All cashiers are bonded.
5. Daily cash counts are made by cashier department supervisors
Question 6
Newell Company has the following internal control procedures over cash disbursements. Match the internal control principle that is applicable to each procedure.
Segregation of duties
Establishment of responsibility
Physical controls
Independent internal verification
Documentation procedures
1. Only the treasurer or assistant treasurer may sign checks.
2. Company checks are prenumbered.
3. Check signers are not allowed to record cash disbursement transactions.
4. The bank statement is reconciled monthly by an internal auditor.
5. Blank checks are stored in a safe in the treasurer's office.
Wiley Plus Question 1 through 6
