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Fireworks for 70% of its loss. What amount should Fireworks report as
loss from the explosion?
Question 9
When the dollar-value LIFO (DV LIFO) retail method is used, what is
the first step in the calculation?
Question 10
Smith Co. has a checking account at Small Bank and an interest-bearing
savings account at Big Bank. On December 31, year 1, the bank
reconciliations for Smith are as follows: What amount should be
classified as cash on Smith's balance sheet at December 31, year 1?
Question 11
At the end of the current year (calendar-fiscal year), a creditor firm's 6%
note receivable balance is $10,000. Two years remain in the note term.
Interest is due each December 31. The debtor's financial position has
deteriorated causing the creditor to reevaluate the note. After careful
consideration, the creditor believes that only 60% of the principal
($10,000) will be collected at the end of the term. The only interest
expected to be received is 2% of the original principal for one year, also
to be collected at the end of the term. At the end of the current year,
what amount of expense or loss is recognized by the creditor for this
loan impairment? The present value of $1 two years hence at 6% is .89,
and at 2% is .961.
Question 12
Hutch, Inc. uses the conventional retail inventory method to account for
inventory. The following information relates to 2004 operations: What
amount should be reported as cost of sales for 2004?
Question 13
Trans Co. uses a periodic inventory system. The following are inventory
transactions for the month of January: Trans uses the average pricing
method to determine the value of its inventory. What amount should