Reference no: EM132479887

Question 1 - Jefferson Services Company records the payment of $325 cash for previously accrued expenses and then makes an accrual of $500 for a revenue. The impact of these two entries on total net income and working capital is an increase of:

a. Net Income $325, Working Capital $825

b. Net Income $825, Working Capital $325

c. Net Income $325, Working Capital $500

d. Net Income $500, Working Capital $825

e. Net Income $500, Working Capital $500

Question 2 - The CQ Company uses the periodic method for inventory. All sales and purchases are on credit. How does CQ account for a return of merchandise from a customer?

a. Debit Sales Return, Credit Accounts Receivable

b. Debit Accounts Receivable, Credit Sales Receivable

c. Debit Inventory, Credit Cost of Goods Sold

d. Debit Inventory, Credit Accounts Receivable

e. Debit Accounts Receivable, Credit Sales Return

Question 3 - Given the following information for an inventory item of the Scottsdale Corporation:

Cost $108

Replacement Cost $102

Estimated Sales Price $120

Normal Profit $6

Cost of Completion $13

Using the LCNRV Rule, the proper inventory amount for the balance sheet is:

a. $108

b. $101

c. $115

d. $102

e. $107