Financial Accounting

NOTE : In some MCQ 's there is no need of working , as they are purely conceptual , although I have provided all necessary working where needed

ANSWERS OF MCQ 'S CHAPTERS 6 7 (E ) In 20X7 , Laredo should recognize 100 million in revenue

2 (E . Goods or services must be delivered and cash must be received

3 (B ) Sales returns and allowances

4 (B ) Cash (800-16 ) 784

Cash Discount on Sales (800 x 2 ) 16

Accounts Receivable 800

5 (C ) Bad Debts Expense 10 ,425

Allowance for Uncollectible Accounts 10 ,425 p

WORKING OF MCQ 'S NO 5

Sales 900 ,000

Less : Cash Sales (900 ,000 x 25 (225 ,000

Credit Sales 675 ,000

Credit Sales 675 ,000 x 1 .5 10 ,125 (Bad debt amount

So Bad debt expense for the year 10 ,125

6 (A ) Allowance for Uncollectible Accounts 1 ,125

Accounts Receivable 1 ,125

7 (B ) Accounts Receivable 600

Allowance for Uncollectible Accounts 600

Cash 600

Accounts Receivable 600

8 (B ) Bad Debts Expense (60 ,000 x15 ) 9 ,000

Allowance for Bad Debts 9 ,000

9 (A ) Inventory 6 ,000

Accounts Payable 6 ,000

10 (C ) Purchases 6 ,000

Accounts Payable 6 ,000

11 (B ) Accounts Payable 500

Inventory 500

12 (D ) Accounts Payable 500

Purchase Returns Allowances 500

13 (A ) Accounts Payable 5 ,500

Inventory (6 ,000 x 2 ) 120

Cash (5500-120 ) 5 ,380

14 (D ) Accounts Payable 5 ,500

Cash Discounts on Purchases (6000 x 2 ) 120

Cash (5500-120 ) 5 ,380

WORKING FROM MCQ 'S NO 15...