Acct 201 Exam 3

The interest on a $6,000, 6%, 60-day note receivable is: A) $60. B) $240. C) $40. D) $80.

A) $60.

Which one of the following payroll taxes does not result in a payroll tax expense for the employer? A) Federal income tax B) FICA C) Federal unemployment taxes D) State unemployment taxes

A) Federal income tax

When a specific customer's account is identified as uncollectible, the journal entry to write off the account is A) credit to Accounts Receivable debit to Allowance for Doubtful Accounts B) debit to Accounts Receivable credit to Notes payable C) debit to Allowance for Doubtful Accounts credit to cash D) debit to cash credit to Accounts Receivable

A) credit to Accounts Receivable debit to Allowance for Doubtful Accounts

Mayco issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2018, at 98. The journal entry to record the issuance will show a A) debit to cash for $1,960,000 B) debit to cash of $2,000,000 C) credit to Bonds Payable for $2,040,000 D) credit to Discount on Bonds Payable for $40,000

A) debit to cash for $1,960,000

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. the entry to record this event would include a A) loss/gain of $40,000 B) credit to the Equipment account for 220,000 C) credit to Accumulated Depreciation for $200,000. D) debit to cash for $420,000

A) loss/gain of $40,000

The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is: A) $50,000. B) $50,750. C) $54,500. D) $59,000.

B) $50,750.

If the market rate of interest is greater than the contract rate of interest, the bonds will sell for less than their face amount. A) Premium B) Discount C) Payable D) Convertible

B) Discount

A 60-day note receivable dated July 13 has a maturity date of: A) September 12. B) September 11. C) September 10. D) September 13.

B) September 11 July 13 - 60 days July 31-13= 18 days Aug. 31= 31 days 18+31= 49 days 49 days +11 days= September 11

Which one of the following items is not considered a part of the cost of a truck purchased for business use? A) Freight charges B) Truck license C) Sales Tax D) Cost of littering on the side of the road

B) Truck license

A company receives $265, of which $15 is for sales tax. The journal entry to record the sale would include a A) debit to Sales Taxes Expense for $15. B) credit to Sales Taxes Payable for $15. C) debit to Sales Revenue for $265. D) debit to Cash for $260.

B) credit to Sales Taxes Payable for $15.

On January 15, 2015, Craig Company received a two-month, 9%,$9,000 note from William Pentel for the settlement of his open account. The entry by Craig Company on January 15, 2015 would include a: A) debit of $9,135 to Notes Receivable. B) debit of $9,000 to Notes Receivable. C) credit of $9,135 to Accounts Receivable. D) credit of $9,000 to Notes Receivable.

B) debit of $9,000 to Notes Receivable.

Where are natural resources generally shown on the balance sheet? A) under intangibles B) under property, plant, and equipment C) under owner's equity D) under investments

B) under property, plant, and equipment

ABC Corp uses the percentage of receivable basis to record bad debt expense and concludes that 4% of the receivables will become uncollectible. Accounts receivable are $600,000 at the end of the year, and the allowance for doubtful accounts has a credit of $5,000. Prepare the adjusting journal entry to record bad debt expense for the year. A) Allowance for Doubtful Accounts 24,000 Bad Debt Expense 24,000 B) Bad Debt Expense 24,000 Allowance for Doubtful Accounts 24,000 C) Bad Debt Expense 19,000 Allowance for Doubtful Accounts 19,000 D) Allowance for Doubtful Accounts 19,000 Bad Debt Expense 19,000

Bad Debts Expense 19,000 Allowance for Doubtful Accounts 19,000 600,000* 4%= 24,000 24,000-5,000= 19,000

What bonds are long-term liabilities A) Discounted bonds B) Premium bonds C) bonds payable

C) Bonds Payable

When a note receivable is honored, Cash is debited for the note's A) Notes Receivable B) Interest Revenue C) Maturity Value D) Face Value

C) Maturity Value

Hull Company acquires land for $86,000 cash. Additional costs are as follows: Removal of shed $300 Filling and grading 1,500 Salvage value of lumber of shed 120 Broker commission 1,130 Paving of parking lot 10,000 Closing costs 560 Hull will record the acquisition cost of the land as A) $86,000 B) $89,610 C) $87,690 D) $89,370

D) $89,370 Acquisition cost=Purchase cost + removal of shed + filling and grading - salvage value of lumber of shed + broker commission + closing cost=$86,000+$300+$1,500−$120+$1,130+$560=$89,370

The entry to record the dishonor of a note receivable assuming the payee expects eventual collection includes a debit to? A) Notes Receivable B) Bad Debit Expense C) Allowance for Doubtful Accounts D) Accounts Receivable

D) Accounts Receivable

On January 1, 2015, Carter Corporation issued $5,000,000, 10-year, 8% bonds at 102.Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2015 is A) Cash.......................................................................................5,000,000 Bonds Payable..............................................................5,000,000 B) Cash.......................................................................................5,100,000 Bonds Payable..............................................................5,100,00010 C) Premium on Bonds Payable..................................................100,000 Cash.......................................................................................5,000,000 Bonds Payable..............................................................5,100,000 D) Cash.......................................................................................5,100,000 Bonds Payable..............................................................5,000,000 Premium on Bonds Payable.........................................100,000

D) Cash.......................................................5,100,000 Bonds Payable..............................................................5,000,000 Premium on Bonds Payable.........................................100,000

Autumn Company purchased a building on January 2 by signing a long-term $630,000 mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a A)debit to the interest expense account for $5250 B)debit to the cash account for $5400 C)credit to the mortgage payable account for $5400 D) credit to the cash account for $5250

D) debit to the interest expense account for $5250

Allowance for Doubtful Accounts on the balance sheet A) is offset against total current assets B) increases the cash realizable value of accounts receivable C) appears under the heading "Other Assets." D) is offset against accounts receivable

D) is offset against accounts receivable

A company purchased factory equipment on April 1, 2021 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2021 is A) 10,500 B) 14,000 C) 12,000 D) 16,000

The computation of the depreciation expense under the straight line method is shown below: = (Original cost - residual value) ÷ (useful life) = ($160,000 - $20,000) ÷ (10 years) = ($140,000) ÷ (10 years) = $14,000 In this method, the depreciation is same for all the remaining useful life Now for 9 months from April 1 to December 31, the depreciation expense would be = $14,000 × 9 months ÷ 12 months = A) $10,500

A gain or loss on disposal of a plant asset is determined by comparing the: A) replacement cost of the asset with asset's original cost B) book value of the asset with the asset's original cost C) original cost of the asset with the proceeds received from its sale D) book value of the asset with the proceeds received from its sale

d. book value of the asset with the proceeds received from its sale