TEST 3

Piper, Inc. had credit sales for the period of $85,000. The balance in Allowance for Doubtful Accounts is a debit of $827. How much will the credit be to Allowance for Doubtful Accounts if Piper uses the percent of credit sales method of estimating uncollectible accounts and they estimate that 2% of credit sales will be uncollectible?

$1,700

A company purchased furniture on January 1. Its cost was $15,600, and it had a residual value of $3,600. Its useful life is determined to be 8 years. Using double-declining balance depreciation, the depreciation for year 1 to the nearest dollar will be:

$3,900.

Cesario Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000 and is expected to produce 50,000 units in its lifetime. During the first year of operation, it produced 15,000 units. To the nearest dollar, the depreciation for the first year under the units of production method will be:

$34,500

The company uses the allowance-aging of A/R method to account for uncollectible accounts. The Allowance for Doubtful Accounts now has a $2,210 credit balance. If the company estimates that $7,640 of accounts will be uncollectible based on an aging of Accounts Receivable, what will be the amount of the journal entry to record estimated uncollectible accounts?

$5,430

On September 1, 2013, Sharp Corp. lent $2,400 to Marla Smith on a 1 year 10% promissory note. The amount of interest to be accrued on December 31 will be:

$80.

A company purchased a computer system on March 1. Its cost was $55,000 and it had an estimated salvage value of $10,000. It was expected to have a useful life of 5 years. To the nearest dollar, the depreciation for year 2 using straight-line depreciation will be: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

$9,000.

Metropolitan Masonry made a basket purchase of three items. Item X was appraised at $39,000; item Y was appraised at $57,000 and item Z was appraised at $61,000. The purchase price was $129,000. The amount at which item Y should be recorded is:

($57,000/$157,000) × $129,000.

A $9,000 bond issue with a stated interest rate of 9%, when the market rate of interest is 9%, means that the bond will sell for:

9,000

What type of account is Allowance for Doubtful Accounts?

A contra-asset account

How are net receivables calculated?

Accounts Receivable less the Allowance for Doubtful Accounts

Leo's Leather Shoppe has a checking account that earns interest. The current bank statement shows interest earned of $22.14. This amount should be:

Added to Leo's book balance

Deposits in transit are

Added to the bank balance

The journal entry to write off a customer's account under the direct write-off method is

Bad Debt Expense, debit; Accounts Receivable/customer name, credit.

The end of period adjusting entry for bad debt expense under the allowance method is

Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit.

A cost incurred by the seller when credit customers do not pay is called:

Bad debt expense

In accounting, what is the meaning of capitalized?

Capitalized means that an asset account is debited (increased) for the cost of an asset.

When a company settles a warranty claim by repairing the defective goods, the journal entry will include a debit to _______ and a credit to _______.

Estimated Warranty Payable, Cash

Which intangible asset is recorded only when an acquiring company purchases another company?

Goodwill

A liability:

Is a future obligation.

Which of the following matches the correct cost allocation terms with the given assets?

Plant Assets Depreciation | Intangible Assets Ammortization | Natural Resources Depletion

Which of the following is NOT true concerning NSF checks:

The amount of the NSF check will need to be added to the book balance.

A manufacturer may identify its product with a unique symbol and prevent other manufacturers from using the same symbol by obtaining a

Trademark

A $575 collection on a note from a customer was reflected on Ronaldo Co's bank statement. When doing the bank reconciliation, Ronaldo Co. should

add $575 to their book balance

blank

blank

When a company issues bonds, what are they doing?

borrowing money from 3rd parties

S&C Roofing had sales on account of $32,500 which were subject to state sales tax of 8%. The entry to record the sales would be to:

debit Accounts Receivable, $35,100; credit Sales revenue, $32,500; credit Sales tax payable, $2,600.

A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $700. The journal entry to record this transaction is to:

debit Cash for $700, debit Accumulated Depreciation - Truck for $50,000, debit Loss on Disposal for $5,300 and credit Truck for $56,000.

On January 1, Greene Autos signed a $250,000, 6%, 30-year mortgage that requires semiannual payments of $9,033 on June 30 and December 31 of each year. The journal entry to record the first semiannual payment would be (round interest calculation to the nearest dollar) to:

debit Interest Expense, $7,500; debit Mortgage Payable, $1,533; credit Cash, $9,033.

TNT Construction had cash sales for the month of June totaling $44,000. TNT offers a 1-year warranty on its construction services. If TNT estimates warranty claims will equal 5% of sales, the journal entry to record the estimated warranty expense for the month is:

debit Warranty expense, $2,200; credit Warranty payable, $2,200.

Betta Group purchased Danio, Inc. for $960,000. The market value of Danio's assets and liabilities at the time of purchase were $1,300,000 and $360,000 respectively. The journal entry to record this will include

debit to Asset accounts for $1,300,000, debit to Goodwill $20,000, credit to Liabilities $360,000 and credit to Cash $960,000.

If an asset produces more revenue in its early years, the depreciation method best suited for this asset would be the:

double-declining balance method

A bank statement shows the:

ending bank balance as of a specific date.

Assets that CANNOT be seen, touched, or held are called:

intangible assets

A $30,000 bond issue with a stated interest rate of 5%, when the market rate of interest is 6%, means that the bond will sell for

less than 30,000

The need to create an estimated warranty liability arises from the ________ principle

matching

A $45,000 bond issue with a stated interest rate of 10%, when the market rate of interest is 7%, means that the bond will sell for:

more than 45,000

If a bond's stated rate of interest is equal to the market rate of interest, the bond will be issued at

par

The amount that a borrower must pay back to the bondholders on the maturity date is the:

principal

The rate of interest that is printed on the bond is called the ________ rate of interest

stated

On a bank reconciliation, outstanding checks are

subtracted from the bank balance.