accounting

Which of the following is NOT used to determine the cost of net purchases?

feight out

A depreciation method in which an equal amount of depreciation expense is assigned to each year of the asset's use is the:

straight line method

A company's trading security has a fair value which exceeds its cost. When recording the journal entry:

The correct answer is: the Unrealized Gain on Trading Securities account will be credited.

When a note matures:

The correct answer is: the debtor must pay the creditor the maturity value of the note.

When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

The correct answer is: the seller has title to the goods while they are in transit.

Barbarino Corporation purchased land and a building for $60,000. An appraisal indicates that the land's market value is $400,000 and the building's market value is $600,000. When recording this transaction Barbarino should debit:

$400,000 ÷ ($400,000 + $600,000) = 40% 40% × $60,000 = $24,000

On January 2, 2013, Saminski, Inc., acquired equipment for $600,000. The estimated life of the equipment is 5 years. The estimated residual value is $20,000. What is the Accumulated Depreciation of the equipment on December 31, 2014, if Saminski uses the double-declining-balance method of depreciation?

$600,000 × 40% = $240,000 ($600,000 - $240,000) × 40% = $144,000 $240,000 + $144,000 = $384,000

On January 1, 2015, a machine has a remaining book value of $7000. The residual value of the machine is $1200. The company uses the double-declining-balance method of depreciation. If 2015 is the last year for depreciation, what is Depreciation Expense for the year ending December 31, 2015?

$7000 - $1200 Residual Value = $5800

On January 4, 2012, Margaret's Cafe acquired equipment for $147,500. The estimated life of the equipment is 4 years or 42,500 hours. The estimated residual value is $20,000. What is the depreciation for 2012, if Margaret's Cafe uses the asset 14,100 hours and uses the units-of-production method of depreciation?

($147,500 - $20,000) ÷ 42,500 = $$3 per hour $3 × 14,100 = $42,300

On January 2, 2015, Kaiman Corporation acquired equipment for $300,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $30,000. What is the balance in Accumulated Depreciation on December 31, 2016, if Kaiman Corporation uses the straight-line method of depreciation?

($270,000 ÷ 5) = $54,000 $54,000 × 2 = $108,000

Marjorie Corporation acquired a building on January 1, 2015, for $500,000. The building had an estimated useful life of 20 years and an estimated salvage value of $27,000. On January 1, 2017, Marjorie Corporation determined that the building could only be used for another 10 years and there would be no salvage value. Compute depreciation expense for the year ending December 31, 2017, if Marjorie Corporation uses straight-line depreciation.

($500,000 - $27,000) ÷ 20 = $23,650 × 2 = $47,300 ($500,000 - $47,300) ÷ 10 = $45,270

Jensen Corporation uses the percentage-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000 and management estimates 2% will be uncollectible. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $16,000. After all necessary adjusting entries are made, the balance in Allowance for Uncollectible Accounts will be:

(2,000,000 × 0.02) = 40,000 40,000 - 16,000 = 24,000

A company borrows $10,200 from the bank at 13% interest for thirty days. $10,200 is the ________ of the note. The maturity value of the note is ________.

10,200 + (10,200 × 13% × 30/365) = 10,309

Sanfran Company purchased inventory for $110,000. In addition they had purchase returns of $8000 and paid freight-in of $7000. Sanfran Company's net cost of purchases would be:

110,000 - 8000 + 7000 = 109,000

Under a perpetual inventory system, when a sale is made, the seller prepares:

2

Jumpin Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,000. The amount of Uncollectible-Account Expense reported on the income statement will be:

2,000,000 × 0.02 = 40,000

Michael Company purchased a trading investment that had a carrying amount of $35,300 when they decided to sell it. Michael Company purchased the investment for $31,600. If Michael Company sold this investment for $45,200, Michael will have a(n):

45,200 - 35,300 = 9900 gain

The balance in Accounts Receivable at the beginning of the year was $540,000. The balance in Accounts Receivable at the end of the year was $750,000. Customer accounts of $410,000 were written off. The company collected $4,020,000 from credit customers and $1,010,000 from cash customers. What are credit sales for the year?

540,000 + x -410,000 - 4,020,000 = 750,000

A company has gross revenue of $505,000; sales discounts of $2700; and sales returns and allowances of $3000. Net revenue is:

B. $499,300. Correct505,000 - 2700 - 3000 = 499,300

Tony Company sells a piece of equipment for $20,000 cash. The equipment has a historical cost of $60,000 and accumulated depreciation of $55,000. What is the gain or loss on sale of the equipment?

Book Value = $60,000 - $55,000 = $5000 Cash Received = $20,000 Gain = Cash Received $20,000 - Book Value $5000 = $15,000

Franco Company sold office furniture for $2500 cash. The furniture cost $70,000 and had accumulated depreciation through the date of sale totaling $32,000. The company will recognize

Book value = $70,000 - $32,000 = $38,000 Cash proceeds $2500 Loss on sale = $38,000 - $2500 = $35,500 Loss on sale = Book value - Cash proceeds The correct answer is: a loss of $35,500

A machine is purchased for $70,000. The transportation costs were $1000, installation costs were $2000 and taxes on the purchase price were $400. Testing runs of the new machine cost $4000. What is the cost of the machine?

The correct answer is: $77,400

A company purchased inventory for $900 per unit. The company later sold one unit of the inventory for cash of $1500. Under the perpetual inventory system, which accounts will be debited to record the sale?

The correct answer is: Cash, $1500; Cost of Goods Sold, $900

On December 1, Macy Company sold merchandise with a selling price of $1000 on account to Mrs. Jorgensen, with terms 2/10, n/30. Ignoring Cost of Goods Sold, what journal entry did Macy Company prepare on December 1?

The correct answer is: Debit Accounts Receivable for $1000 and credit Sales Revenue for $1000.

The aging-of-receivables method of estimating uncollectible accounts is:

The correct answer is: a balance sheet approach, since it focuses on accounts receivable.

When a company receives a cash dividend from a trading security, the journal entry includes:

The correct answer is: a debit to Cash and credit to Dividend Revenue.

A business offers credit terms of 2/15, n/30. These terms indicate that:

The correct answer is: a discount of 2% can be taken if the invoice is paid within 15 days of the invoice date.

Investments in trading securities:

The correct answer is: are reported at fair value on the balance sheet.

Pat's Pets recently paid to have the engine in its delivery van overhauled. The estimated useful life of the van was originally estimated to be 4 years. The overhaul is expected to extend the useful life of the van to 10 years. The overhaul is regarded as a(n):

The correct answer is: capital expenditure.

Two accounts that would appear on the financial statements of a merchandising company that are not needed by a service company are:

The correct answer is: cost of goods sold and inventory.

On July 1, the Corrao Company purchased $1100 of inventory on account with credit terms of 2/10, net 30. Corrao Company uses the perpetual inventory system. On July 5, the Corrao Company paid the amount due. What journal entry did they prepare on July 5?

The correct answer is: debit Accounts Payable for $1100, credit Inventory for $22 and credit Cash for $1078 1100 times 0.02

On May 1, the Santelle Company purchased $800 of inventory on account with credit terms of 2/10, net 30. Santelle Company uses the perpetual inventory system. On May 2, the seller gave Santelle Company a $120 allowance due to a product defect. What journal entry did Santelle Company prepare on May 2?

The correct answer is: debit Accounts Payable for $120 and credit Inventory for $120

Using a perpetual inventory system, what journal entry(ies) is(are) prepared when two units of merchandise are sold on account?

The correct answer is: debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory

The journal entry to record depreciation expense is:

The correct answer is: debit Depreciation Expense, credit Accumulated Depreciation.

The journal entry to record accrued interest on a note receivable at year end is:

The correct answer is: debit Interest Receivable and credit Interest Revenue.

Emporium Bank lends money to a customer on a six month note. What journal entry does the bank prepare?

The correct answer is: debit Note Receivable and credit Cash

Fourth Company receives a note from a customer for a $13,000 sale. On the date of sale, what journal entry did Fourth Company prepare?

The correct answer is: debit Notes Receivable for $13,000 and credit Sales Revenue for $13,000

Under the allowance method, the entry to write off a $6600 uncollectible account includes a:

The correct answer is: debit to Allowance for Uncollectible Accounts for $6600 and credit to Accounts Receivable for $6600.

If a buyer takes advantage of a sales discount, the journal entry recorded by the seller will include a(n):

The correct answer is: debit to Cash, debit to Sales Discount and credit to Accounts Receivable.

On October 1, 2015, the Early Bank lends money to a customer on a six month note. The bank accrues interest on the note at December 31, 2015. The journal entry on December 31, 2015 by the bank would include a:

The correct answer is: debit to Interest Receivable and a credit to Interest Revenue for three months of interest.

Matthew Company purchases a trading security for $12,000 cash. The journal entry to record this transaction will include a

The correct answer is: debit to the Investment in Trading Securities account and a credit to Cash

Costs that do not extend a plant asset's capacity or its useful life, but merely maintain the asset or restore it to working order are recorded as:

The correct answer is: expenses.

The book value of a plant asset is defined as:

The correct answer is: historical cost minus accumulated deprecation.

The income statement approach to estimating uncollectible accounts is called the ________ method. The balance sheet approach to estimating uncollectible accounts is called the ________ method.

The correct answer is: percent-of-sales; aging-of-receivables

Sales revenue is based on the ________ of the inventory, while cost of goods sold is based on the ________ of the inventory.

The correct answer is: selling price, cost

The Allowance for Uncollectible Accounts is classified as:

contra asset

A company purchased a machine for $600,000 many years earlier. The accumulated depreciation on the machine is $100,000. The machine is scrapped. Which journal entry is prepared to record the disposal?

debit Loss on Disposal of Machine for $500,000, debit Accumulated Depreciation for $100,000 and credit Machine for $600,000