BA Final

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $2,185,000. An appraisal of the property reported the following values: Land, $666,000; Building, $1,980,000 and Equipment, $1,314,000. What value will be recorded for the building?

$1,092,500

On January 1, Year 2, Grande Company had a $64, and 800 balance in the Accounts Receivable account and a $1,600 balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $159,000 of service on account. The company collected $173,500 cash from accounts receivable. Uncollectible accounts are estimated to be 1% of sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement is:

$1,590

On September 1, Steam Corporation has 28 units of inventory purchased for $6 each. They purchased 19 additional units for $5 each on September 10, and 10 additional units for $9 each on September 25. During the month, the company sold 20 units of inventory. What is the Cost of Goods Sold under the Average Cost method?

$124

Farmer Company purchased equipment on January 1, Year 1 for $82,000. The equipment is estimated to have a 5-year life and a salvage value of $4,000. The company uses the straight-line depreciation method. If the original expected life remained the same (i.e., 5-years), but at the beginning of Year 4, the salvage value was revised to $8,000, the annual depreciation expense for each of the remaining years would be:

$13,600

On January 1, Year 2, the Accounts Receivable balance was $21,700 and the balance in the Allowance for Doubtful Accounts was $2,000. On January 15, Year 2, an $580 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is

$19,700

Parker Company purchased an asset costing $22,000 on January 1, Year 1. The asset had an expected five year life and a $11,000 salvage value. Based on this information, the amount of depreciation expense and accumulated depreciation appearing on the Year 2 financial statements would (assume straight-line depreciation)

$2,200 and $4,400 respectively

Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $60,000 and $2,850, respectively. During Year 2, Allegheny wrote off $1,100 of Uncollectible Accounts. After aging its receivables, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $4,600. What will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?

$2,850

A company issued $20,000 of 8% bonds, with interest payable semiannually on July 1. On December 31, after their first interest payment, their Bonds Payable and Interest Expense accounts are:

$20,000 and $800, respectively

A machine originally cost the company $42,000 with the useful life of 8 years and $4,000 salvage value. The company uses straight-line depreciation. The company sold the machine at the end of the 4th year and recorded a loss on the sale of $2,000. How much cash did the company receive on the sale?

$21,000

The Miller Company recognized $105,000 of service revenue earned on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $73,000 of cash from accounts receivable. The company estimates that it will be unable to collect 3% of its sales on account. The net realizable value of Miller's receivables at the end of Year 2 was:

$28,850

Rosewood Company made a loan of $7,600 to one of the company's employees on April 1, Year 1. The one year note carries a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31st, Year 1 and Year 2, respectively, would be:

$342 and $114

On January 1, Year 1, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. The company uses the double-declining balance method. The book value of the truck at the end of Year 1 is:

$36,000

The balance sheet of Flo's Restaurant showed total assets of $520,000, liabilities of $168,000 and stockholders' equity of $352,000. An appraiser estimated the fair value of the restaurant assets at $615,000. If Alice Company pays $825,000 cash for the restaurant the amount of goodwill acquired would be:

$378,000.

On May 1, 2020 Runes Inc. has $8,000 in Accounts Receivable and $150 in Allowance for Doubtful Accounts. During the month, they collected $3,000 in Accounts Receivable in cash. At month-end, they revised their estimate of uncollectible Accounts and determined that 4% of their ending Accounts Receivable will be uncollectible. What is the net realizable value of Accounts Receivable at month end?

$4,800

Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $40,00 and $3,020, respectively. The company has three categories of receivables with account balances in each category as follows - 'Not Past Due' ($25,000), '0-30 Days Past Due' ($12,000), 'More than 30 days Past Due' ($3,000). Their estimates of uncollectible balances for the three categories are 5%, 20% and 50% respectively. Given this information, what is the ending balance of Allowance for Doubtful Accounts for Year 2?

$5,150

On January 1, Year 1, Friedman Company purchased a truck that cost $52,000. The truck had an expected useful life of 200,000 miles over 8 years and a $9,000 salvage value. During Year 2, Friedman drove the truck 27,000 miles. The company uses the units-of-production method. The amount of depreciation expense recognized in Year 2 is: (Do not round intermediate calculations.)

$5,805

On January, Year 1, Stiller Company paid $288,000 to obtain a patent. Stiller expected to use the patent for 5 years before it became technologically obsolete. The remaining legal life of the patent was 8 years. Based on this information, the amount of amortization expense of the December 31, Year 3 income statement and the patent account on the December 31, Year 3, Balance sheet, respectively, would be:

$57,600 and $115,200

The balance sheet of Flo's Restaurant showed total assets of $700,000 & liabilities of $240,000. An appraiser estimated the fair value of the restaurant assets at $840,000. If Alice Company pays $1,185,000 cash for the restaurant the amount of goodwill acquired would be:

$585,000

Retained Earnings is $6,000 at the beginning of the year. During the year, sales revenue of $10,000 and cost of goods sold of $8,500 is recorded. Depreciation expense of $600 is also recorded. Finally, a computer with a book value of $700 is sold for $200 cash. What is the company's retained earnings at year end?

$6,400

AutoBus Inc. purchased a new bus on January 1, 2020 for $65,000. The bus required an additional upgrade costing $10,000 to fit additional passengers. Wages of the bus driver is expected to cost $5,000 per month. AutoBus plans to use the bus for 15 years and sell it for $3,000. If the company sells the bus in 8 years for $30,000, what is the gain or loss recorded on sale?

$6,600 loss

A company purchased furniture for $3,500 and estimates annual depreciation expense to be $700. The useful life of the furniture is 4 years. Based on the information given, what is the furniture's residual value?

$700

On March 1, BMX Inc. has 30 units of inventory purchased for $20 each. BMX purchased 20 additional units for $17 each on March 15, and 25 additional units for $24 each on March 24. If BMX sold 40 units of inventory during March, what is the cost of ending inventory under the FIFO method?

$770

On August 1, Spire Inc.has $10,000 in total liabilities. During August, the company borrowed $2,800 on their line of credit and paid $100 of interest on that line of credit. The company also paid $2,000 of sales taxes to the state government, and paid $1,700 cash for repair services under customer warranty claims. On August 31, what is the company's total liabilities?

$9,100

Anchor Company purchased a manufacturing machine with a list price of $92,000 and received a 2% cash discount on the purchase. The machine was delivered under terms FOB shipping point, and freight costs amounted to $3,600. Anchor paid $5,100 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $6,600 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:

$98,860

On January 1, 2020, Pilates Inc. purchased equipment for $5,000 with a 8-year useful life and residual value of $200. The book value of the equipment would be $3,200 on December 31st of which year?

2022

Benitez Co. had sales of $580,000 in Year 1. The company expects to incur warranty expenses amounting to 4% of sales. The company spent $15,400 cash during Year 1 to fulfill warranty obligations. Based on this information:

All of the above

Golden Inc. sells customized luxury boats. Since their products are expensive and are easily distinguishable from one another, they currently use the specific identification method. During January, they purchased three boats at the following costs - January 3: $80,000. January 11: $120,000. January 15: $95,000. During January, they sold the boat that they purchased on January 11th. If the company had used LIFO instead of the specific Identification method, how much would their Cost of Goods Sold change?

Cost of Goods Sold would decrease by $25,000

Hoover Company purchased two identical inventory items. The item purchased first cost $45.50. The item purchased second cost $50.75. Then Hoover sold one of the inventory items for $70. Based on this information, the amount of:

Gross Margin is $21.88 if they use the Average Cost method

Which financial statement(s) is (are) affected when depreciation expense is recognized?

Income statement and balance sheet

Which of the following represents the impact of a taxable cash sale of $600 on the accounting equation if the sales tax rate is 4%?

Increase Cash by $624, Increase Sales Tax Payable by $24, Increase Sales Revenue by $600

George Co. took out a loan of $28,000 from their line of credit on July 1st. A 9% interest rate applies to the line of credit, to be paid monthly. Their first interest payment was paid on July 31st. How did these transactions in July affect the company's total assets?

Increases by $27,790

On August 19th, Kibler Inc. recorded a $5,300 increase in Accounts Receivable and a $5,300 increase in Allowance for Doubtful Accounts. Which of the following events do this reflect?

The recovery of a $5,300 accounts receivable previously written off by Kibler Inc.

The net realizable value of accounts receivable is the amount of receivables a company expects to collect:

True

The practice of reporting the net realizable value of receivables in the financial statements is commonly called the:

allowance method of accounting for uncollectible accounts

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $66,200 and $1,900, respectively. During the year, Kincaid reported $166,000 of credit sales. Kincaid also wrote off $1,400 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $185,700. Kincaid estimates that it will be unable to collect one percent of credit sales. Kincaid's entry required to recognize the uncollectible accounts expense for Year 2 will:

decrease total assets and net income

When prices are falling, LIFO will result in:

higher income and a higher inventory valuation than will FIFO.

The primary reason for a business to allow customer to purchase goods or services on account is to:

increase sales

Which of the following terms is applied to long-term assets that have no physical substance and provide rights, privileges and special opportunities to businesses?

intangible assets

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500, respectively. During the year Kincaid reported $72,500 of credit sales. Kincaid wrote off $550 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $74,550. Kincaid estimates that it will be unable to collect one percent of credit sales. Kincaid's entry to recognize the write-off of the uncollectible accounts will:

not affect total assets or stockholders equity

Which method of depreciation is used by most U.S. companies for financial reporting purposes?

straight-line