Assuit University Year: 1 Guiding

Faculty of Commerce May 2020 Questions

Department of Accounting Financial Accounting (2)

First Question:
Choose the right answer a, b, c, or d:
1. A merchandising company that sells directly to consumers is a
a. retailer.
b. wholesaler. ‫الشركات التجاريه التى تبيع بضاعة للعمالء هم‬
Retailer ‫تجار التجزئة‬
c. broker.
d. service company.

2. Sales revenue less cost of goods sold is called

a. gross profit.
I/S ‫قائمه الدخل الهدف منها معرفه ارباح وحسائر الشركه‬
b. net profit. Sales Revenue
c. net income. (-) cost of goods sold
Gross profit
d. marginal income.

3. After gross profit is calculated, operating expenses are deducted to determine

a. gross margin. Gross profit
b. net income. (-) operating expense
Net income
c. gross profit on sales.
d. net margin.

4. Cost of goods sold is determined only at the end of the accounting period in
a. a perpetual inventory system.
‫نظام الجرد الدورى‬
b. a periodic inventory system. ‫دائما بعمل جرد فعلى للمخزون نهايه كل‬
c. both a perpetual and a periodic inventory system. ‫فتره محاسبيه ( نهايه سنه اونصف سنه‬
)‫او ربع سنه‬
d. neither a perpetual nor a periodic inventory system.

5. In a perpetual inventory system, cost of goods sold is recorded

a. on a daily basis. Perpetual ‫ديما باستخدام طريقة‬
b. on a monthly basis. Sales ‫ فى حالة‬Two entry ‫بعمل‬
c. on an annual basis. Sale ‫واحده ل‬
COGS ‫والتانى ل‬
d. with each sale.

1 | Page
6. Under a periodic inventory system, purchase of merchandise is debited to the
a. Merchandise Inventory account.
b. Cost of Goods Sold account.
c. Purchases account.
d. Accounts Payable account.
Journal entry under a periodic
Debit credit
Purchase ……………….XX
A/P ………………………….. XX
‫لو قالك فى السوال‬
under a perpetual inventory system
‫االجابه هتتغير وهنختار‬
a. merchandise inventory account

7. The journal entry to record a return of merchandise purchased on account

under a perpetual inventory system would credit
a. Accounts Payable.
Debit credit
b. Purchase Returns and Allowances.
Accounts payable XX
c. Sales. Inventory XX
d. Merchandise Inventory
B ‫ هنختار االجابة‬Periodic ‫لو قالك فى السوال‬

8. A buyer would record a payment within the discount period under a perpetual
inventory system using total invoice value by crediting
a. Accounts Payable.
Debit Credit
b. Merchandise Inventory.
Accounts payable………….XX
c. Purchase Discounts (taken). Discounts taken ………………..XX
d. Sales Discounts (given). Cash…………………………………..XX
‫ملحوظه لو قالك فى السؤال‬
Using total invoice value by debiting
a.Accounts payable ‫هتتغير االجابه وهنختار رقم‬

9. Which of the following accounts has a normal credit balance?

a. Sales Returns and Allowances
b. Sales Discounts Debit ‫كل هذه الحسابات طبيعتها‬
c. Sales c. sale ‫ماعدا رقم‬
d. Selling Expense

2 | Page
10. The journal entry to record a return of merchandise purchased on account
under a periodic inventory system would be
a. Accounts Payable
Purchase Returns and Allowances ‫لو قالك فى الجمله‬
Under a perpetual inventory system
b. Purchase Returns and Allowances C ‫هنختار االجابة رقم‬
Accounts Payable
c. Accounts Payable
Inventory
d. Inventory
Accounts Payable
11. Which of the following accounts has a normal credit balance?
a. Purchases
b. Sales Returns and Allowances Debit ‫كل هذه الحسابات طبيعتها‬
c. Transportation-in d. purchase discounts (taken) ‫ماعدا رقم‬
d. Purchase Discounts (taken).

12. Flynn Company purchased merchandise inventory with an invoice price of

$5,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Flynn
Company pays within the discount period?
a. $5,000 Total purchase 5,000
b. $4,900 Discount = 5,000 × 2% = (100)
c. $4,500 Net cost = 4,900
d. $4,600 ‫لو الشركة دفعت خالل فتره الخصم يبقى هاخد الخصم‬
‫وهيتم تسجيل الرقم بعد الخصم‬

13. The entry to record the collection of the sale amount within the discount
period on a sale of $750 with terms of 2/10, n/30 will include a credit to
a. Sales Discounts for $15.
credit A/R = 750
b. Cash for $735.
debit Discount given = 750 × 2% = (15)
c. Accounts Receivable for $750. debit Collected in cash 735
d. Sales for $750. journal entries Debit credit
cash ………………….. 735
discount given ….. 15
A/R ……………………… 750

a ‫ هنحتار االجابه رقم‬debit to ‫ولو قالك فى السوال‬

3 | Page
14. Company X sells $400 of merchandise on account to Company Y with credit
terms of 2/10, n/30. If Company Y issued a check taking advantage of the
discount offered, what is the amount of Company Y's check?
a. $280 ‫فى هذا السوال طالب منك لو الشركه دفعت المبلغ اللى عليها خالل فتره الخصم‬
b. $392
c. $360 A/P = 400
Discount taken = 400 × 2% = 8
d. $320 Paid in cash = 392

15. Holt Company sells merchandise on account for $2,000 to Jones Company
with credit terms of 2/10, n/30. Jones Company returns $400 of merchandise
that was damaged, along with a check to settle the account within the discount
period. What is the amount of the check?
Notes
a. $1,960
A/P = 2,000 – 400 = 1,600
b. $1,968
Discount taken = 1,600 × 2% = 32
c. $1,600 Paid in cash = 1,568
d. $1,568
16. The credit terms offered to a customer by a business firm are 2/10, n/30,
which means that
a. the customer must pay the bill within 10 days.
b. the customer can deduct a 2% discount if the bill is paid between the 10th and
30th day from the invoice date.
c. the customer can deduct a 2% discount if the bill is paid within 10 days of the
invoice date. ‫ ايام من تاريخ الفاتوره‬01 ‫ لو دفع الفاتوره خالل مده‬%2 ‫العميل هياخد خصم‬
d. two sales returns can be made within 10 days of the invoice date and no returns
thereafter.
17. Company A sells $500 of merchandise on account to Company B with credit
terms of 2/10, n/30. If Company B issued a check taking advantage of the
discount offered, what is the amount of Company B's check?
a. $350
A/P = 500
b. $490
Discount = 500 × 2% = 10
c. $450 Paid in cash = 490
d. $400

4 | Page
18. Hale Company sells merchandise on account for $1,500 to Kear Company
with credit terms of 2/10, n/30. Kear Company returns $300 of merchandise that
was damaged, along with a check to settle the account within the discount
period. What is the amount of the check?
a. $1,470 A/P = 1,500 – 300 = 1,200
Discount = 1,200 × 2% = 24
b. $1,476
Paid in cash = 1,176
c. $1,200
d. $1,176

19. Feine Company sells merchandise on account for $2,000 to Tang Company
with credit terms of 2/10, n/30. Tang Company returns $300 of merchandise that
was damaged, along with a check to settle the account within the discount
period. What entry does Feine Company make upon receipt of the check?
a. Cash .............................................. 1,700
Accounts Receivable .......... 1,700
b. Cash ............................................... 1,666
Sales returns & allowances 300
Sales Returns and Allowances 334 A/R 300
Accounts Receivable .......................... 2,000
c. Cash ................................................. 1,666 A/R = 2,000 – 300 = 1,700
Discount given = 1,700 × 2% = 34
Sales Returns and Allowances ........ 300 Collected in cash = 1,666
Sales Discounts (given) ................... 34
Cash 1,666
Accounts Receivable ........... 2,000
Discount given 34
d. Cash ................................................. 1,960 A/R 1,700
Sales Discounts .................................... 40
C ‫اجمع االتنين انترى على بعض هتطلعلك االجابه‬
Sales Returns and Allowances 300
Accounts Receivable ............. 1,700

5 | Page
20. Logan Company made a purchase of merchandise on credit from Claude
Corporation on August 3, for $6,000, terms 2/10, n/45. On August 10, Logan
makes the appropriate payment to Claude. The entry to record the cash payment
on August 10 in Logan Company books using net cost method is
a. Accounts Payable ......................... 6,000
Cash .................................. 6,000 ‫طالب منك الدفع خالل فتره الخصم باستخدام‬
Net cost ‫طريقه‬
b. Accounts Payable ......................... 5,880
NOTES
Cash .................................. 5,880 A/P = 6,000
c. Accounts Payable .......................... 6,000 Discount = 6,000 × 2% = 120
Paid in cash = 5,888
Purchase Returns and Allowances 120
Cash .................................................. 5,880 Journal entries at net cost
d. Accounts Payable ......................... 6,000 A/P 5,880
Cash 5,880
Discount taken ................. 120
Cash .................................. 5,880

Use the following information for questions 21–24.

A company using periodic inventory system and just starting business, made the
following four inventory purchases in June:

June 1 1500 units $ 9000

June 10 2000 units 14000
June 15 3000 units 24000
June 28 1500 units 15000
Total 8000 units $ 62000

A physical count of inventory on June 30 reveals that there are 2000 units on
hand.
‫ حاجات اساسيه وهما‬3 ‫هذه المساله الزم نكون عارفين‬

1) Units ‫عدد الوحدات‬

2) Unit cost ‫تكلفه الوحده الواحده ( مش موجوده فى المساله) يبقى انا اللى هعملها‬
3) Total cost ‫اجمالى التكلفة‬

total cost 9 000 14 000 24 000 15 000

Unit cost = total unit , 1 500 = 6 , 2 000 = 7 , 3 000 = 8 , 1 500 = 10

6 | Page
 ‫‪Date‬‬ ‫‪Units‬‬ ‫‪Unit Cost‬‬ ‫‪Total Cost‬‬
‫‪June 1‬‬ ‫‪1500 units‬‬ ‫‪$6‬‬ ‫‪$ 9,000‬‬
‫‪June 10‬‬ ‫‪2000 units‬‬ ‫‪$7‬‬ ‫‪14,000‬‬
‫‪June 15‬‬ ‫‪3000 units‬‬ ‫‪$8‬‬ ‫‪24,000‬‬
‫‪June 28‬‬ ‫‪1500 units‬‬ ‫‪$10‬‬ ‫‪15,000‬‬
‫‪Total‬‬ ‫‪8000 units‬‬ ‫‪$ 62,000‬‬
‫‪Total unit = 8000 units‬‬ ‫اجمالى عدد الوحدات فى المخزون‬
‫‪Inventory on hand = ending inventory = 2000‬‬ ‫الباقى من المخزون بعد البيع‬
‫‪Units sold = 8,000 – 2,000 = 6,000‬‬ ‫عدد الوحدات التى تم بيعها من المخزون‬

‫‪21. Using the LIFO inventory method, the value of the ending inventory on June‬‬
‫‪30 is‬‬
‫‪a. $ 12,500‬‬
‫‪Using LIFO method‬‬
‫‪b. $ 19,000‬‬ ‫‪COGS = 1,500 × 10 = 15,000‬‬
‫‪Ending inventory = 500 × 7 = 3,500‬‬
‫‪c. $ 12,000‬‬ ‫‪+ 1,500 ×6 = 9,000‬‬ ‫‪+ 3,000 × 8 = 24,000‬‬
‫‪d. $ 20,000‬‬ ‫‪12,500‬‬ ‫‪+ 1,500 × 7 = 10,500‬‬ ‫‪49,500‬‬

‫طريقه ‪ LIFO method‬تعنى انى البضاعة الموجوده فى االخر هبيعها االول ومعنى هذا الكالم انى‬
‫‪.1‬هبدا ابيع من اخر تاريخ ‪ 10500‬ثم التاريخ اللى قبله ‪ 30000‬ثم التاريخ اللى قبله هاخد جزء ‪ 10500‬حتى ابيع‬
‫‪ 60000‬وحده كاملة وبكده انا حسبت تكلفه البضاعة المباعة ال ‪COGS= 49,500‬‬
‫‪ .2‬والباقى من المخزون بعد البيع هيكون فى التواريخ االولى ‪ending inventory = 12,500‬‬

‫‪22. Using the FIFO inventory method, the amount allocated to cost of goods sold‬‬
‫‪for June is‬‬ ‫‪Using FIFO method‬‬
‫‪a. $ 49,500‬‬ ‫‪COGS = 1,500 × 6 = 9,000‬‬
‫‪+ 2,000 × 7 = 14,000‬‬
‫‪b. $ 42,000‬‬ ‫‪+ 2,500 × 8 = 20,000‬‬ ‫‪43,000‬‬
‫‪c. $ 43,000‬‬ ‫‪Ending inventory = 500 × 8 = 4,000‬‬
‫‪d. $ 50,000‬‬ ‫‪+ 1,500 × 10 = 15,000‬‬ ‫‪19,000‬‬

‫طريقه ‪ fifo method‬تعنى انى البضاعه الموجوده فى االول هيتم بيعها االول‬
‫‪ .1‬هبدا ابيع من التاريخ االول تم التاريخ اللى تحته ثم جزء من التاريخ اللى بعدوا حتى ابيع ‪ 60000‬وحده كامله‬
‫وبكده انا حسبت تكلفه البضاعه المباعه ‪COGS = 43,000‬‬
‫‪ .2‬الباقى من المخزون (البضاعه) هيكون فى التواريخ االخيره ‪Ending inventory = 19,000‬‬

‫‪7 | Page‬‬
23. Using the average-cost method, the amount allocated to the ending
inventory on June 30 is
a. $ 16,000
total cost 62 000
b. $ 15,500 Average cost = total unit = 8 000 = 7.75
c. $ 14,000 GOGS = 6,000 × 7.75 = 46,500
d. $ 12,000 Ending inventory = 2,000 × 7.75 = 15,500

24. The inventory method which results in the highest gross profit for June is
a. the FIFO method. : ‫ملحوظه‬
b. the LIFO method. ‫اى طريقه تعطى اعلى ربح‬
‫( بيدينى اعلى ربح‬COGS ‫الطريقة االقل تكلفة اى (اقل‬
c. the weighted average unit cost method. 490500 ‫ من طريقة الليفو‬430000 ‫طريقة الفيفو اقل تكلفة‬
d. not determinable. ‫وبالتالى الفيفو اقل تكلفه ف هتعطينى اعلى ربح‬

Use the following information for questions 25–27.

At May 1, 2008, Treeline Company had beginning inventory consisting of 100
units with a unit cost of $7. During May, the company purchased inventory as
follows: 200 units at $7 each
300 units at $8 each
The company sold 500 units during the month for $12 per unit. Treeline uses the
average cost method.
‫تعالوه نحسب كده مع بعض‬
Units unit cost total cost
100 7 700
200 7 1,400
300 8 2,400
Total 600 4,500

Total cost = 4,500 ‫اجمالى التكلفة‬

Total unit = 600 units ‫اجمالى عدد الوحدات‬
Unit sold = 500 ‫عدد الوحدات المباعة‬
ending units = 600 – 500 = 100 ‫ وحده‬100 ‫ يبقى الباقى‬500 ‫ بعت منهم‬600 ‫كان عندك‬

8 | Page
25. The average cost per unit for May is
a. $7.00. Total cost = (100 × 7) + (200× 7) + (300× 8) =4,500
b. $7.50. Total unit = 100 + 200 + 300 = 600 units
4 500
c. $7.60. Average cost per unit = 600 = $7.5
d. $8.00.

26. The value of Treeline’s inventory at May 310 2008 is

a. $700.
Ending inventory = 600 – 500 = 100 units
b. $750.
The value of inventory = 100 units × $7.5 = 750
c. $800.
d. $4,500.

27. Treeline’s gross profit for the month of May is

a. $2,250. Sales revenue (500 × 12) = 6,000
COGS = 500 × 7.5 = 3,750
b. $3,750. Gross profit = 2,250
c. $4,500.
d. $6,000.

Use the following information for questions 28-31.

Tier II Company uses a periodic inventory system. Details for the inventory
account
for the month of January, 2008 are as follows:

Units Per unit price Total

Balance, 1/1/08 200 $5.00 $1,000
Purchase, 1/15/08 100 5.30 530
Purchase, 1/28/08 100 5.50 550

At end of the month (1/31/08) inventory showed that 120 units were on hand.
28. How many units did the company sell during January, 2008?
a. 80
Total units = 200 + 100 + 100 = 400 400 ‫اجمالى عدد الوحدات‬
b. 120
Units on hand = (120) ‫ وحده‬120 ‫باع منهم‬
c. 200 Units sold = 280 ‫ وحده‬280 ‫يبقى بعت منهم‬
d. 280

9 | Page
29. If the company uses FIFO, what is the value of the ending inventory?
a. $520
Using FIFO Method ‫اللى موجود فى المخزن االول هبيعه االول‬
b. $600 COGS = (200 × 5) + (80 × 5.30) = 1,424
c. $656 Ending inventory =(100 × 5.50) + (20 × 5.30) = 656

d. $1,424 Ending ‫فى هذا السوال هو طالب منك ال‬

d. ‫هتتغير االجابه وهنختار‬COGS ‫لو كان طالب منك فى السوال ال‬

30. If the company uses LIFO, what is the value of the ending inventory?
a. $520 Using LIFO method
b. $600 COGS = 100 × 5.5 = 500
c. $656 100 × 5.3 = 530
80 × 5 = 400 1430
d. $1,480 Ending inventory = 120 × 5 = 600

31. If the company uses FIFO and sells the units for $10 each, what is the gross
profit for the month? Income statement
a. $1,376 Sales revenue = 280 × 10 = 2,800
b. $1,424 (-) cost of goods sold = (1,424)
c. $2,800 Gross profit = 1,376

d. $3,000

Use the following inventory information for questions 32–34.

July 1 Beginning Inventory 20 units at $19 $ 380
July 7 Purchases 70 units at $20 1,400
July 22 Purchases 10 units at $22 220
Total 100 units $ 2,000
A physical count of merchandise inventory on July 31 reveals that there are 30
units on hand.
‫خلى بالك فى المساله كده‬
total units = 20 + 70 + 10 = 100 units 100 ‫اجمالى عدد الوحدات‬
ending inventory = 30 units 30 ‫الباقى منهم‬
unit sold = 100 – 30 = 70 70 ‫يبقى بعت‬
10 | Page
32. Using the average-cost method, the value of ending inventory is
a. $580.
Using average method
b. $600. total cost 2 000
c. $610. Average cost per unit = total unit = 100 = 20

d. $620. COGS = 70 × 20 = 1,400

Ending inventory = 30 × 20 = 600

33. Using the FIFO inventory method, the amount allocated to cost of goods sold
for July is
Using FIFO method
a. $580. COGS = 20 × 19 = 380
b. $620. + 50 × 20 = 1,000 1,380
c. $1,380.
d. $1,420. Ending inventory = 20 × 20 = 400
+ 10 × 22 = 220 620

b. ‫ هتتغير االجابه وهنختار رقم‬Ending ‫لو كان طالب منك ال‬

34. Using the LIFO inventory method, the amount allocated to cost of goods sold
for July is Using LIFO method
a. $580. COGS = 10 × 22 = 220
b. $620. + 60 × 20 = 1,200 1,420

c. $1,380. Ending inventory = 10 × 20 = 200

d. $1,420. + 20 × 19 = 380 580

a. ‫ هتتغير االجابه وهنختار رقم‬Ending ‫لو كان طالب منك ال‬

Use the following information for questions 35–37.

Nov. 1 Inventory 15 units @ $8.00 each = 120
Nov. 8 Purchase 60 units @ $8.60 each = 516
Nov. 17 Purchase 30 units @ $8.40 each = 252
Nov. 25 Purchase 45 units @ $8.80 each = 396
Total 150 units = 1,284
A physical count of merchandise inventory on November 30 reveals that there
are 50 units on hand. Assume a periodic inventory system is used.

11 | Page
35. Cost of goods sold under the average-cost method is
a. $860.
Total unit = 15 + 60 + 30 + 45 = 150 units
b. $856. Units on hand (ending) = 50 units
c. $845. Units sold = 150 – 50 = 100 units

d. $800. 35) using average method

1 284
Average cost per unit = 150 = 8.56
36. Ending inventory under FIFO is
COGS = 100 × 8.56 = 856
a. $438. Ending inventory = 50 × 8.56 = 428
b. $846. 35) using FIFO method
c. $421. COGS = 15 × 8 = 120
+ 60 × 8.6 = 516
d. $863.
+ 25 × 8.4 = 210 846
Ending inventory = 5 × 8.4 = 42
37. Ending inventory under LIFO is + 45 × 8.8 = 396 438
a. $438.
b. $421. 37) using LIFO method
COGS = 45 × 8.8 = 396
c. $846. + 30 × 8.4 = 252
d. $863. + 25 × 8.6 = 215 863

Ending inventory = 35 × 8.6 = 301

+ 15 × 8 = 120 421

Use the following inventory information for questions 38–40.

July 1 Beginning Inventory 200 units at $ 30 each
5 Purchases 800 units at $25 each
14 Sale 700 units
21 Purchases 1,700 units at $20 each
30 Sale 1,500 units

38. Assuming that a perpetual inventory system is used, what is the cost of
ending inventory on a FIFO basis?
a. $15,000
b. $10,000
c. $12,500
d. $12,000

12 | Page
SOLUTION : Using FIFO method
Purchase Sold Balance
Date Units Unit Total Unit Unit Total Units Unit Total
cost cost cost cost cost cost
1/7 200 30 6,000
5/7 800 25 20,000 200 30 6,000
800 25 20,000
1,000 26,000
14/7 200 30 6,000 300 25 7,500
500 25 12,500
700 18,500
21/7 1,700 20 34,000 300 25 7,500
1,700 20 34,000
2,000 40,500
30/7 300 25 7,500 500 20 10,000
1,200 20 24,000
1,500 31,500
COGS = 18,500 + 31,500 = 50,000 ‫ملحوظه هامة‬

39. Assuming that a perpetual inventory system is used, what is the cost of
ending inventory on a LIFO basis?
a. $15,000
b. $10,000
c. $12,500
d. $12,000

SOLUTION : Using LIFO method

Purchase Sold Balance
Date Units Unit Total Unit Unit Total Units Unit Total
cost cost cost cost cost cost
1/7 200 30 6,000
5/7 800 25 20,000 200 30 6,000
800 25 20,000
1,000 26,000

13 | Page
 14/7 700 25 17,500 200 30 6,000
100 25 2,500
300 8,500
21/7 1,700 20 34,000 200 30 6,000
100 25 2,500
1,700 20 34,000
2,000 42,500
30/7 1,500 20 30,000 200 30 6,000
100 25 2,500
200 20 4,000
500 12,500
COGS = 17,500 + 30,000 = 47,500 ‫ملحوظة هامة‬

40. Assuming that a perpetual inventory system is used, what is the cost of
ending inventory under the average-cost method?
a. $10,650
b. $10,000
c. $12,500
d. $10,450

Using average method

Purchase Sold Balance
Date Units Unit Total Unit Unit Total Units Unit Total
cost cost cost cost cost cost
1/7 200 30 6,000
5/7 800 25 20,000 200 30 6,000
800 25 20,000
1,000 26 26,000
14/7 700 26 18,200 300 26 7,800
21/7 1,700 20 34,000 300 26 7,800
1,700 20 34,000
2,000 20.9 41,800
30/7 1,500 20.9 31,350 500 20.9 10,450

COGS = 18,200 + 31,350 = 49,550 ‫ملحوظة هامة‬

14 | Page
Second Question:
Choose the right answer a, b, c, or d:
41. Current assets of a company would not include
a. inventory.
Current assets ‫كل هذه الحسابات من ضمن ال‬
b. accounts receivable.
liabilities ‫ من ضمن ال‬notes payable ‫ماعدا حساب‬
c. notes payable.
d. cash.

42. Cash in transit is: ‫ودائع ( فلوس) فى طريقه للبنك‬

a. cash sent to the bank but not recorded yet in the company records.
b. cash sent to the bank but not recorded yet in the bank records.
c. cash sent to the company but not recorded yet in the company records.
d. cash sent to the company but not recorded yet in the bank records.
‫ الف وقبض ثمنها كاش وسجل عمليه البيع فى الشركه والبنك لسه‬100 ‫ مجدى باع بضاعه ب‬: ‫مثال‬
‫وتم ارسال الفلوس الى البنك ( فلوس فى طريقه للبنك) بمعنى انها لسه فى طريقه للبنك ولم تسجل بعد فى البنك‬
‫فمحتاج يسجل الفلوس فى حسابه فى البنك علشان حسابات الشركه تساوى حسابات البنك‬

43. NSF check is: ‫شيكات بدون رصيد‬

a. check rejected by the bank and this rejection not recorded yet in the company
records.
b. check rejected by the bank and this rejection not recorded yet in the bank
records.
c. check rejected by the company and this rejection not recorded yet in the bank
records.
d. check rejected by the company and this rejection not recorded yet in the
company records.
‫ وثمن البضاعه اخذته فى شيك فورى فالمحاسب تسرع وسجل‬2000000 ‫ مجدى باع بضاعه ب‬: ‫مثال‬
‫ فالبنك قال الشيك‬: ‫( بعت موظف البنك لصرف الشيك‬journal entry) ‫عمليه البيع فى دفاترالشركه‬
‫قبل ٌ البنك) فبالتالى انا كمحاسب محتاج انقص الشيك اللى انا زوته فى دفاتر الشركة‬
ِ ‫بدون رصيد(شيك مرفوض من‬
44. Outstanding checks are:
a. checks issued by the bank but not paid or recorded yet by the company.
b. checks issued by the bank but not paid or recorded yet by the bank.
c. checks issued by the company but not paid or recorded yet by the company.
d. checks issued by the company but not paid or recorded yet by the bank.
15 | Page
Use the following inventory information for questions 45–47
Allowance for doubtful accounts 1/1/2019 $50000
Actual uncollectible accounts (bad debts) during 2019 $70000
Recovery of previous uncollectible accounts, collected in cash $5000
Accounts receivable 31/12/2019 $800000
New allowance is 5% of accounts receivable
The company uses the balance sheet approach

45. The journal entry to record actual uncollectible accounts:

a. Allowance for doubtful accounts ................. 70000
Accounts Receivable ...................... 70000

b. Accounts Receivable ..................................... 70000

Allowance for doubtful accounts…. 71111

c. Allowance for doubtful accounts................... 70000

Cash ................................................ 70000

d. Cash ............................................................... 70000

Allowance for doubtful accounts.... 70000

46. The journal entry to record recovery of previous uncollectible accounts:

a. Allowance for doubtful accounts........................................... 5000
Accounts Receivable ............................................................ 5000
b. Accounts Receivable ............................................................ 5000
Allowance for doubtful accounts........................................... 5000
c. Allowance for doubtful accounts........................................... 5000
Cash ...................................................................................... 5000
d. Cash ...................................................................................... 5000
Allowance for doubtful accounts........................................... 5000

16 | Page
47. The adjusting entry to record the settlement of allowance at 31/12/2019:
a. Allowance for doubtful accounts........................................... 55000
Accounts Receivable ............................................................ 55000
b. Uncollectible accounts expense......................................... 55000
Allowance for doubtful accounts........................................... 55000
c Uncollectible accounts expense.............................................. 25000
Allowance for doubtful accounts............................................ 25000
d. Cash ...................................................................................... 55000
Allowance for doubtful accounts........................................... 55000

Use the following inventory information for questions 48-50

Allowance for doubtful accounts 1/1/2019 $60,000
Actual uncollectible accounts (bad debts) during 2019 $52,000
Recovery of previous uncollectible accounts, collected in cash $12,000
Accounts receivable 31/12/2019 $500,000
Net credit sales $600,000
New allowance is 5% of net credit sales
The company uses the income statement approach
48. The journal entry to record actual uncollectible accounts:
a. Accounts Receivable ............................................ 52000
Allowance for doubtful accounts........................... 52000
b. Allowance for doubtful accounts......................... 52000
Accounts Receivable ............................................. 52000
c. Allowance for doubtful accounts......................... 52000
Cash ...................................................................... 52000
d. Cash .................................................................... 52000
Allowance for doubtful accounts........................... 52000

17 | Page
49. The journal entry to record recovery of previous uncollectible accounts:
a. Allowance for doubtful accounts........................................... 12000
Accounts Receivable ............................................................ 12000
b. Cash ...................................................................................... 12000
Allowance for doubtful accounts........................................... 12000
c. Allowance for doubtful accounts........................................... 12000
Cash ...................................................................................... 12000
d. Accounts Receivable ............................................................ 12000
Allowance for doubtful accounts........................................... 12000

50. The adjusting entry to record the settlement of allowance at 31/12/2019:

a. Allowance for doubtful accounts.................................. 10000
Accounts Receivable ...................................................... 10000

b. Uncollectible accounts expense.................................... 10000

Allowance for doubtful accounts................................... 10000

c Uncollectible accounts expense..................................... 30000

Allowance for doubtful accounts.................................... 30000

d. Cash .............................................................................. 30000

Allowance for doubtful accounts................................... 30000

51. Purchased furniture amounted to $8000, paid in cash $3000 and the
remaining is due within 10 days
a. Furniture debit 8000 & cash credit 8000.
b. Cash debit 8000 & furniture credit 8000.
c. Furniture debit 8000 & cash credit 3000, accounts payable credit 5000.
d. Furniture debit 8000 & cash credit 3000, notes payable credit 5000.

18 | Page
52. Purchased equipments for $12000, of which made $3000 a cash down
payment and the rest for note after two months.
a. Equipment debit 12000 and cash credit 12000.
b. Cash debit 3000, notes receivable debit 9000 and equipment credit 12000.
c. Equipment debit 12000, cash credit 3000, and accounts payable credit 9000.
d. Equipment debit 12000, cash credit 3000, and notes payable credit 9000.

53. ABC Company purchased a machine for note amounted to $150000 on July
30. Transportation expense was $6000 and installation expense was $4000,
these expenses paid in cash.
The journal entry is:
a. Debit: machines $150000, transportation expense $6000 and installation
expense $4000, credit: notes payable $150000, cash $10000.
b . Debit: machines $160000, credit: notes payable $150000, cash $10000.
c. Debit: machines $150000 and cash $10000, , credit: notes payable $150000,
transportation expense $6000 and installation expense $4000.
d. Debit: machines $160000, credit: accounts payable $150000, cash $10000.

Notes:
Total cost of machine = purchase (notes) …………………………… 1500000
+ expense ( paid in cash)
Transportation expense 6,000
Installation expense 4,000 10,000
Total cost of machine ………………………………………… 1600000
Journal entries
Machine 160,000
N/P 150,000
Cash 10,000

54. ABC Company purchased a land amounted to $250000 of which $50000 paid
in cash and the remaining on credit. registration expense was $$20000 paid in
cash.
The journal entry is:
a. Debit: land $250000, registration expense $20000, credit: accounts payable
$200000, cash $70000.

19 | Page
 b . Debit: land $250000, registration expense $20000, credit: notes payable
$200000, cash $70000.

c. Debit: land $270000, credit: notes payable $200000, cash $70000.

d. Debit: land $270000, credit: accounts payable $200000, cash $70000.

Total cost of land = purchase (notes) ……………… 250,000

+ expense ( paid in cash)
Registration expense 20,000
Total cost of land …….……………………… 270,000
Journal entries
Land 160,000
A/P 150,000
Cash 10,000

55. ABC Company paid in cash the following expenses:

1. Periodical maintenance of machines $3000.
2. renewal of vehicle engine $10000.
The journal entry is:
a. Debit: machines $3000, and renewal expense $10000, credit: cash $13000.
b . Debit: machines $3000, and vehicles $10000, credit: cash $13000. .
c. Debit: maintenance expense $3000, and vehicles $10000, credit: cash $13000.
d. Debit: maintenance expense $3000, and renewal expense $10000, credit: cash
$13000.

Maintenance expense 3,000

Cash …………………….. 30000

Vehicles …………………. 100000

Cash ……………. 100000

The journal entry is : ‫ادمج االثنين قيد على بعض‬

Vehicles …………………….. 100000

Maintenance expense 3,000
Cash ……………… 130000

20 | Page
56. ABC Company purchased a computer for $35000 on May 1. The company
expects to use the computer for 5 years. It has $5000 Residual value. Monthly
depreciation expense, using straight-line method, at 31/12 on computer is:
a. $7000.
b. $8000.
c. $4000.
d. $6000.

Notes : 1/5 31/12

Cost of equipment = 35,000
Residual value = 5,000
Estimated useful life = 5 years
cost of equipment - residual value
Depreciation expense = estimated useful life
35 000 - 5 000 8
= 5 × 12 = 4,000

57. ABC Company purchased an equipment for $100000 on January 1, 2018. The
annual depreciation rate is 20%. It has $5000 Residual value.
Annual depreciation expense, using declining method, at 31/12/2018 and
31/12/2019 on the equipment is:
a. $20000 2018 and $20000 2019.
b. $19000 2018 and $19000 2019.
c. $20000 2018 and $19000 2019.
d. $20000 2018 and $16000 2019.

Notes :
Cost of equipment = 100,000
Depreciation rate = 20%
Residual value = 5,000
100%
Depreciation rate = life = 20%
100%
Estimated useful life = 20% = 5 years
Depreciation expense (2018) = cost of equipment × depreciation rate
= 100,000 × 20% = 20,000

Depreciation expense (2019) = (cost – depreciation exp ) × rate

21 | Page = (100,000 – 20,000) × 20% = 16,000
58. ABC Company purchased a machine for $175000 on June 30. The company
expects to use the equipment for 5 years. It has $15000 Residual value. The total
estimated units could be produced by this machine are 80000 units. The actual
production for the first three years was:
2017 15000 units, 2018 20000 units and, 2019 17000 units.
Annual depreciation expense, using units of outputs method,
at 31/12/2017 and 31/12/2018 on the machine is:
a. $16000 2017 and $32000 2018.
b. $30000 2017 and $40000 2018.
c. $32000 2017 and $32000 2018.
d. $40000 2017 and $34000 2017.

Cost of machine = 175,000

Residual vaue = 15,000
Estimated useful life = 5 years
Total estimated unit = 80,000 units
cost of machine - residual value 175 000 - 15 000
Depreciation per unit = total estimated unit = 80 000 units = 2 per unit
Depreciation expense (2017) = 15,000 × 2 = 30,000
Depreciation expense (2018) = 20,000 × 2 = 40,000
Depreciation expense (2019) = 17,000 × 2 = 34,000

59. The cost of old equipment is $125000. The accumulated depreciation of this
equipment until date of sale is $105000. This equipment was sold in cash and the sale
value was $17000.
The journal entry is:

a. Cash.................................................................... 17,000
Accumulated Depreciation—Equipment ............ 105,000
Loss on Disposal.................................................. 3,000
Equipment ........................................................................ 125,000

b. Cash.................................................................. 17,000
Equipment ............................................................ 125,000
Accumulated Depreciation—Equipment.......................... 105,000
Gain on Disposal ............................................................... 37,000
22 | Page
c. Cash................................................................... 17,000
Accumulated Depreciation— Equipment.......... 125,000
Equipment.......................................................... 125,000
Gain on Disposal ................................................ 17,000

d. Accumulated Depreciation—Equipment......... 105,000

Loss on Disposal................................................ 37,000
Equipment ........................................................................ 125,000
Cash.................................................................................... 17,000

Notes
sale value = 17,000 , cost = 125,000 , acc – depreciation = 10,500
Sale value ……………………………………. 170000
Book value = cost – acc . depreciation
= 125,000 – 105,000 = 20,000
Loss on disposal ……………………… 30000

Journal entries
Cash ……………………… 17,000
Acc – depreciation 105,000
Loss on disposal ….. 3,000
Old equipment ………… 125,000

60. The cost of old equipment is $150000. The accumulated depreciation of this
equipment until date of sale is $135000. This equipment was sold in cash and the sale
value was $20000.
The journal entry is:

a. Cash.................................................................... 10,000
Accumulated Depreciation—Equipment ............ 135,000
Loss on Disposal.................................................. 5,000
Equipment ........................................................................ 150,000

b. Cash..................................................................... 20,000
Equipment ............................................................ 150,000
Accumulated Depreciation—Equipment.......................... 135,000
Gain on Disposal ............................................................... 35,000
23 | Page
c. Cash..................................................................... 20,000
Accumulated Depreciation— Equipment............ 135,000
Equipment........................................................................ 150,000
Gain on Disposal ............................................................... 5,000

d. Accumulated Depreciation—Equipment......... 135,000

Loss on Disposal................................................ 35,000
Equipment ........................................................................ 150,000
Cash.................................................................................... 20,000

Notes
Cost of equipment = 150,000
Acc – depreciation = 135,000
Sale value = 20,000

Sale value ……………………………………………. 20,000

Book value = cost – acc . depreciation
= 150,000 – 135,000 = (15,000)
Gain on disposal ……………………………. 5,000

Journal entries
Cash ………………………………. 200000
Acc – depreciation – equip 135,000
Old equipment ……………………. 1500000
Gain on disposal …………………. 50000

Best Wishes

24 | Page