Accounting Exam 3 HW

$12,100

Able Towing Co. purchased a tow truck for $60,000 on Jan 1, 2012. It was originally depreciated on a straight-line basis over 10 years with an estimated salvage value of $12,000. On Dec 31, 2014, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 more years as of Jan 1, 2014, and the salvage value was adjusted to $2,000. How much is depreciation expense for 2014? a. $4,800 b. $6,000 c. $12,100 d. $15,000

$5,000

At the beginning of the year, Powers Company purchased a piece of machinery for $50,000. It has a salvage value of $5,000, and estimated useful life of 9 years, and estimated units of output of 90,000 units. Actual units produced during the first year were 11,000. How much is depreciation expense for the first year under the straight-line method? a. $5,500 b. $5,300 c. $5,000 d. $5,556

cash (net) realizable value

At what value are accounts receivable reported on the balance sheet? a. Maturity value b. Cash (net) realizable value c. Fair market value d. Present value

$3,540

Buttner Co. borrows $88,500 on Sep 1, 2014 from Harrington State Bank by signing an $88,500, 12% one-year note. How much is accrued interest at Dec. 31, 2014? a. $2,655 b. $10,620 c. $3,540 d. $4,425

The contractual interest rate exceeds the market interest rate

Cuso Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate? a. The market interest rate exceeds the contractual interest rate b. The contractual interest rate exceeds the market interest rate c. The contractual interest rate and the market interest rate are the same d. No relationship exists between the market and contractual rates

$32,000

During 2014, Patterson Wholesale Company had a net credit sales of $750,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2014, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at Dec. 21 was $200,000, what is the required adjustment to the Allowance for Doubtful Accounts at Dec. 21, 2014? a. $30,000 b. $28,000 c. $20,000 d. $32,000

$26,720

Equipment was purchased for $68,000 on Jan 1, 2013. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at Dec 31, 2014 if the straight line method of depreciation is used? a. $13,360 b. $11,440 c. $26,720 d. $22,880

$233

How much accrued interest should be reported on the payee's December 31 balance sheet on a $5,000, 8% 9-month note receivable issued on June 17? a. $233 b. $300 c. $33 d. $400

an estimate of a plant asset's value at the end of its useful life

In computing depreciation, salvage value is: a. an estimate of a plant's asset's value at the end of its useful life b. ignored in all the depreciation methods c. the fair value of a plant asset on the date of acquisition d. subtracted from the accumulated depreciation to determine the plant asset's depreciable cost

Long-term

Liabilities are classified on the balance sheet as current or: a. unearned b. long-term c. deferred d. accrued

both

Linton Company has these obligations at Dec. 31. For each obligation, indicate whether it should be classified as a current liability, a non-current liability or both: -A 10-year mortage payable of $200,000 payable in ten $20,000 annual payments a. non-current liability b. current liability c. both

current liability

Linton Company has these obligations at Dec. 31. For each obligation, indicate whether it should be classified as a current liability, a non-current liability or both: -Accounts payable of $60,000 a. non-current liability b. current liability c. both

current liability

Linton Company has these obligations at Dec. 31. For each obligation, indicate whether it should be classified as a current liability, a non-current liability or both: -Interest payable of $15,000 on the mortgage a. non-current liability b. current liability c. both

non-current liability

Linton Company has these obligations at Dec. 31. For each obligation, indicate whether it should be classified as a current liability, a non-current liability or both: -A note payable for $100,000 due in 2 years a. non-current liability b. current liability c. both

$130,000

Mitchell Corp. bought equipment on Jan 1, 2014. The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would be: a. $130,000 b. $150,00 c. $50,000 d. $180,000

$12,000

Net credit sales for the month are $4,000,000 for Marx Clothiers. It's accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage of receivables basis. The Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment. How much is the balance of the allowance account after adjustment? a. $300,000 b. $17,000 c. $12,000 d. $7,000

$2,000

On Jan 1, 2012, Jamacha Co. purchased some equipment for $15,000. The estimated salvage value and useful life at $3,000 and 4 years, respectively. On Jan 1, 2014, the company determines that the asset's remaining useful life is 3 years. What is the revised depreciation expense for 2014 if the company uses the straight-line method? a. $2,500 b. $4,000 c. $2,250 d. $2,000

$12,000

On Jan 1, a machine with a useful life of 4 years and residual value of $12,000 was purchased for $60,000. What is the depreciation expense for year 2 under straight-line depreciation? a. $30,000 b. $12,000 c. $5,000 d. $24,000

$100,000

Schneider Trucking Inc. purchased a new semi-truck on Jan 1, 2014 for $200,000. Its expected useful life is 4 years and its salvage value is estimated at $25,000. What is the depreciation for 2014 using the declining-balance method at a double the straight-line rate? a. $50,000 b. $87,500 c. $43,750 d. $100,000

Unearned Ticket Revenue

The Jacksonville Jaguars sell season tickets to NFL games. There are 10 home games during the season, which runs from August through December. During February, 65,000 season tickets were sold for $12,000,000 cash. Which account will be credited by the Jacksonville Jaguars upon receipt of the $12,000,000? a. Ticket Revenue b. Prepaid Tickets c. Tickets Receivable d. Unearned Ticket Revenue

depreciation

The term applied to the periodic expiration of a plant asset's cost is: a. depreciation b. depletion c. cost expiration d. amortization

false

True/False If the contractual rate of interest is lower than the market rate of interest, bonds will sell at a premium

Accounts Receivable and Allowance for Doubtful Accounts

When an uncollectible account is recovered after it has been written off, which of the following accounts will be credited in the process: a. Allowance for Doubtful Accounts and Cash b. Allowance for Doubtful Accounts and Bad Debts Expense c. Cash and Accounts Receivable d. Accounts Receivable and Allowance for Doubtful Accounts

When service is provided on account

When is a receivable recorded by a service organization? a. When the related expenses are incurred b. When the customer pays c. When service is provided on account d. When the bill is sent to the customer

current and future years' depreciation should be revised

When there is a change in estimated depreciation: a. only future years' depreciation should be revised b. current and future years' depreciation should be revised c. new plant assets should be acquired to replace the old d. previous depreciation should be corrected

LIFO

Which assume inventory cost flow method: Assumes that the latest units purchased are the first to be sold? a. FIFO b. Average-cost c. LIFO

average-cost

Which assumed inventory cost flow method: Divides cost of goods available for sale by total units available for sale to determine a unit cost? a. FIFO b. Average-cost c. LIFO

FIFO

Which assumed inventory cost flow method: Usually parallels the actual physical flow of merchandise? a. FIFO b. Average-cost c. LIFO

declining-balance

Which depreciation method calculates annual depreciation expense based on book value at the beginning of each year? a. declining-balance b. straight-line c. salvage value d. units-of-activity

Land

Which of the following is NOT a depreciable asset? a. Land b. Buildings c. Land Improvements d. Equipment

cost of acquisition

Which of the following is NOT a way to express the useful life of a depreciable asset? a. thirty thousand units b. ten thousand machine hours c. cost of acquisition d. five years

last in, last out

Which of the following is NOT an acceptable inventory costing method? a. Last in, first out b. average cost c. last in, last out d. first in, first out

It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold

Which of the following is true of the FIFO inventory method? a. It assumes that the cost of the earliest units purchased are the last to be allocated to cost of goods sold b. It assumes that the cost of the earliest units purchased are the first to be allocated to the ending inventory c. It assumes that the cost of the earliest units purchased are the last to be allocated to the beginning inventory d. It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold

Dividends payable

Which of the following most likely would be classified as a current liability? a. Dividends b. Three-year notes payable c. Bonds payable in 5 years d. Mortgage payable as a single payment in 10 years

Interest receivable

Which of the following should be classified as an "other" receivable? a. Accounts receivable b. Interest receivable c. Notes receivable d. Trade accounts receivable

specific identification method inventory valuation requires physical flow to be representative of the cost flow

Which of the following statements is true? a. FIFO inventory valuation requires physical flow of goods to be representative of the cost flow b. LIFO inventory valuation requires physical flow of goods to be representative of the cost flow c. specific identification method inventory valuation requires physical flow of goods to representative of the cost flow d. all of these answer choices are correct

Mortgages payable

Which one of the following is NOT a typical current liability? a. Current maturities of long-term debt b. Interest payable c. Mortgages payable d. Salaries payable

Allowance for Doubtful Accounts is debited

Which one of the following is part of the transaction that is recorded when an account is written off under the allowance method? a. Accounts Receivable account is debited b. Loss on Accounts Receivable account id debited c. Bad Debts Expense account is debited d. Allowance for doubtful Accounts is debited