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Question 1

During the months of November and December 2014, Comfy Home had the following transactions related to holiday candles:

• November 1, 2014 purchased 200 candles for $5 each
• Between November 2-30, 2014 sold 130 candles for a sales price of $15 each
• December 1, 2014 purchased 260 candles for $6 each
• Between December 2-31, 2014 sold 300 candles for a sales price of $15 each

Comfy Home uses a perpetual inventory system. If Comfy Home uses the LIFO method for recording its inventory, what is the amount transferred to the cost of goods sold account during the month of December 2014?

Question 2

During the months of November and December 2014, Comfy Home had the following transactions related to holiday candles:

• November 1, 2014 purchased 200 candles for $5 each
• Between November 2-30, 2014 sold 130 candles for a sales price of $15 each
• December 1, 2014 purchased 260 candles for $6 each
• Between December 2-31, 2014 sold 300 candles for a sales price of $15 each

Comfy Home uses a perpetual inventory system. If Comfy Home uses the FIFO method for recording their inventory, what is the amount transferred to the cost of goods sold account during the month of December 2014?

Question 3

Randolf is interested in making his business more energy efficient. Comfy Home purchased and installed solar panels for $40,000 on January 1, 2016.

For book purposes, the solar panels are being depreciated straight-line over 10 years, with no salvage value. For tax purposes, the solar panels are using an accelerated depreciation method; the company deducts depreciation of $20,000 on its tax return in 2016.

The companys tax rate is 25%. In 2016, this transaction would lead to the creation of a:

Question 4

On 12/31/2019, Comfy Homes customers collectively owed the company $250,000, but the company reported net accounts receivable on its balance sheet of $245,000. During 2020, Comfy Home wrote off $10,000 of its accounts receivable. On 12/31/2020, Comfy Homes customers collectively owed the company $200,000, and the company estimated that 4% of its receivables would ultimately be uncollectible. What amount of bad debt expense should the company record for the year 2020?

Question 6

Tenisa and a colleague have successfully brought in a new client for the decorating business. The first order from the new client is placed on September 15, for a party that takes place October 2-4. The client agrees to pay $1,500 for Comfy Homes decorating services, and pays a deposit of $500 on the date of the order. The remaining balance is billed to the client when the event is complete, and due within 15 days from billing.

What is the journal entry that should be recorded on October 5, once Comfy Home has provided the decorating services and issued the invoice to the client?

A. Debit Cash for $500, Debit Accounts Receivable for $1,000, and Credit Revenue for $1,500

B. Debit Accounts Receivable for $1,000 and Credit Unearned Revenue for $1,000

C. Debit Accounts Receivable for $1,000, Debit Deferred Revenue for $500, and Credit Revenue for $1,500

D. Debit Accounts Receivable for $1,000, Debit Prepaid Expenses for $500, and Credit Revenue for $1,500

Question 8

On July 1, 2015, Comfy Home purchased a van to use for its decorating services. The vans purchase price was $60,000. It is estimated to have a useful life of 10 years and no salvage value. The van is being depreciated straight-line over its useful life.

On December 31, 2017, Comfy Home sold the van for $40,000. What was the gain or loss on the sale? Enter a loss as a negative number.

Question 9

Comfy Home performs its annual inventory count on December 31^st each year. At the inventory count on December 31, 2016, the company had 42 microwaves, which originally cost $80 each. On January 1, 2016, the microwave inventory account balance was $2,100. The cost of goods sold for microwaves during 2016 was $18,000.

What was the value (in dollars) of the microwave inventory purchased in 2016?

Question 10

On December 31, 2016, Comfy Home had the following T-account showing activity during the month of December 2016 related to the finished goods inventory for manufactured candles.

Finished Goods Inventory

[Select] [Select ] $4,000 $5,000 $10,000 $20,000 [ Select ] [Select] Deferred tax asset Deferred tax liability Debit Credit Beginning Balance $ 900 12/10/2016 $ 200 12/18/2016 $ 100 $ 630 12/31/2016 Ending Balance $ 570 What was the company's cost of goods sold for the manufactured candles in December? $330 $630 $570 $680

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