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10/30/2016

Week2QuizOctober2016IntermediateFinancialReporting5.1Distance(WS)

Quiz
Note:Itisrecommendedthatyousaveyourresponseasyoucompleteeachquestion.

Question1(1point)

Usethefollowinginformationtoanswerquestions
1and2.
OnSeptember1,20X5,SSTLtd.soldanewallinone
printertoMillenniumCo.foratotalcontractpriceof
$5,300.Theprinterhasamarketvalueof$3,400.As
partofthecontract,SSTalwaysprovidesonsite
installationandtrainingwhenacustomerpurchasesa
printercustomerswouldnotbeabletoobtainthe
installationservicefromothersuppliers.SST
estimatesthatthefairvalueoftheinstallationservice
is$200.Thecontractpaymentalsoincludesathree
yearmaintenanceserviceagreement.SSTcansellthe
maintenanceserviceseparatelyfor$1,800.Theprinter
wasdeliveredandinstalledonSeptember15,20X5.
Aspartoftheagreement,SSTagreestothefollowing
paymenttermsfromMillennium:
September1,20X5$4,100
September1,20X6$600
September1,20X7$600
SSThasdeterminedthatthecreditriskrate
associatedwithMillenniumis8%.
WhichofthefollowingstatementsistrueforSST
whenrecordingthetransactiononSeptember15,
20X5,ontheincomestatement?

a) Revenueincreasedby$3,255.
b) Revenueincreasedby$3,400.
c) Revenueincreasedby$3,447.
d) Revenueincreasedby$3,600.
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Question2(1point)

SSThasaDecember31yearend.Whichofthe
followingcreditentriesin20X5regardingthesales
contractwithMillenniumiscorrect?

a) CRinterestrevenueby$25
b) CRinterestrevenueby$28
c) CRinterestrevenueby$86
d) CRinterestrevenueby$96
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Week2QuizOctober2016IntermediateFinancialReporting5.1Distance(WS)

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Question3(1point)

WhichofthefollowingsituationscorrectlyusesIFRSs
torecordrevenue?

NorthCo.offersrebatesof2%to
SouthCo.ifSouthpurchasesatleast
40,000unitsinayear.Inthefirst
quarteroftheyear,Northsells
a)
15,000unitstoSouthatasalesprice
of$220,000,andrecordsrevenuein
thisamount.Inprioryears,North
soldover40,000unitstoSouth.
OnJanuary12,20X6,TCTInc.
shippedmerchandisewitharetail
valueof$25,000onconsignmentto
b) AvianStore.TCTrecordedsales
revenueof$25,000withcostof
goodssoldof$18,000forthe
transaction.
ConstructionLtd.entersintoa
contractwithacustomertobuildan
officebuildingfor$2,000,000,witha
performancebonusof$200,000ifthe
buildingisreadybeginningJuly1,
20X7.Thecontractrequirementsare
similartocontractsthatConstruction
c)
hasperformedpreviously,and
managementestimatesthatthereis
a70%probabilitythatthecontract
willbecompletedbyJuly1,20X7.
Giventheuncertainty,management
didntincludethebonusinthetotal
transactionprice.
LangCo.sold100unitstoTrungCo.
onaccountforasellingpriceof
$14,500.Langgrantstherightto
returnproductsthatdonotsellinthe
fourmonthsfollowingdelivery.Past
d)
experienceindicatesthatthenormal
returnrateis12%.WhenTrung
returnedfiveproducts,Lang
recordedadebittorefundliabilityfor
$725.
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Question4(1point)

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10/30/2016

Week2QuizOctober2016IntermediateFinancialReporting5.1Distance(WS)

MayLtd.estimatesitsallowancefordoubtfulaccounts
usingtheyearendagingofaccountsreceivable.
Informationforfiscalyear20X5follows:

AllowancefordoubtfulaccountsatDecember31,20X4
Uncollectibleaccountswrittenoffduring20X5
Uncollectibleaccountsrecoveredduring20X5
Creditsales

$13,000
6,600
3,800
12,840,000

Mayhasthefollowingaccountsreceivablebalancesas
atDecember31,20X5,includingabreakdownofthe
percentageestimatedbymanagementtobe
uncollectible:

030days
outstanding
3160days
outstanding
6190days
outstanding
Over90days
outstanding

%estimatedto
be
Balance uncollectible
$299,600
1%
85,600

5%

30,400

20%

12,400

50%

WhatshouldMaysbaddebtexpensebefortheyear
endedDecember31,20X5?

a) $3,756
b) $6,556
c) $9,356
d) $19,556
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Question5(1point)

B&BCo.hasacreditbalanceof$200,000inits
allowancefordoubtfulaccounts(AFDA)accounton
January1,20X6.During20X6,B&Bestimatesbad
debtexpensetobe0.5%ofnetcreditsales.Salesfor
20X6were$20,000,000.Salesreturnsandallowances
were$350,000,and90%ofthenetsaleswereon
account.During20X6,uncollectibleaccounts
receivableof$120,000werewrittenoff.Accounts
receivablehasadebitbalanceof$1,470,000on
December31,20X6.WhatistheAFDAbalanceon
December31,20X6?

a) $168,425
b) $170,000
c) $178,250
d) $288,425
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Week2QuizOctober2016IntermediateFinancialReporting5.1Distance(WS)

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