acct test 3

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Marshall Company purchases a machine for $800,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce two million units. The machine is used to make 400,000 units during the current period. If the units-of-production method is used, the depreciation rate is:

$0.38 per unit (800,000-40,000)/2,000,000=$0.38 per unit

Heatherbrae Co. uses the units-of-production method to estimate depreciation. The company purchased a new machine for $45,000 that will produce an estimated 100,000 units over its useful life. The estimated residual value of the machine is $5,000. What is the depreciation rate per unit?

$0.40 Depreciation rate per unit = (Cost − Residual value) ÷ Estimated total production= ($45,000 − $5,000) ÷ 100,000 units = $0.40 per unit

A company bought a piece of equipment for $45,700 and expects to use it for eight years. The company then plans to sell it for $5,000. The company has already recorded depreciation of $39,599.79. Using the double-declining-balance method, what is the company's annual depreciation expense for the upcoming year? (Round your answer to the nearest whole dollar amount.)

$1,100

A one-year, $15,000, 12% note is signed on April 1. If the note is repaid on September 1 of the same year, how much interest expense is incurred?

$750

Interest on an obligation is recorded:

as time passes

debts-to-assets ratio

total liabilities/total assets

of the four companies listed below, which company is more likely to use specific identification to value there inventory and cost of goods sold?

wedding cake baker

When originally purchased, a vehicle had an estimated useful life of 9 years. The vehicle cost $33,000 and its estimated residual value is $3,000. After 3 years of straight-line depreciation, the asset's total estimated useful life was revised from 9 years to 5 years and there was no change in the estimated residual value. The Depreciation Expense in year 4 is:

$10,000 The amount of depreciable cost as of the end of year 3 is: ($33,000 − $3,000) − [($30,000 ÷ 9) × 3] = $20,000. The remaining depreciation will be recorded over the remaining 2-year useful life: $20,000 ÷ 2 = $10,000

Use the information above to answer the following question. What is the employer's payroll tax expense for the week?

$119.20

Libby Company uses the percentage of credit sales method for calculating Bad Debt Expense. The company reported $231,000 in total sales during the year; $188,000 of which were on credit. Libby has experienced bad debt losses of 7% of credit sales in prior periods. What is the estimated amount of Bad Debt Expense for the year?

$13,160 Bad Debt Expense = Net credit sales × Bad debt loss rate= $188,000 × 0.07 = $13,160

$152,000

During one pay period, your company distributes $130,500 to employees as net pay. The income tax withholdings were $19,000 and the FICA withholdings were $5,000. Total payroll costs to the company for this pay period, excluding any unemployment taxes, was:

$159,500

A piece of equipment was acquired on January 1, 2018, at a cost of $36,000, with an estimated residual value of $5,000 and an estimated useful life of six years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?

$16,000

On January 1, 2018, Lamar, Inc. purchased equipment for $250,000. It has an estimated useful life of five years, and its residual value is $25,000. If it uses the double declining balance method, what is the amount of accumulated depreciation as of December 31, 2019?

$160,000

Grandview, inc. uses the allowance method. at dec 31, 2018, the company's balance sheet reports accounts receivable, net in the amount of $19,500. on jan 2, 2019, Grandview writes off a $2000 customer account balance when it becomes clear that the customer will never pay. what is the amount of account receivable, net after the write-off?

$19,500

Avalon Industries buys equipment for $24,000, expects to use it for ten years, and then sell it for $3,000. Using the straight-line method, the company should report annual depreciation for the equipment of:

$2,100

$2,100. Depreciation expense per year = (Cost − Residual value) × (1 ÷ Useful life)= ($24,000 − $3,000) × 1 / 10 = $2,100

Grandview, Inc. uses the allowance method. At December 31, 2018, the company's balance sheet reports Accounts Receivable, Net in the amount of $27,200. On January 2, 2019, Grandview writes off a $2,400 customer account balance when it becomes clear that the customer will never pay. What is the amount of Accounts Receivable, Net after the write-off?

$27,200

Charleston, Inc. has Accounts Receivable of $290,000 and an Allowance for Doubtful Accounts of $19,000. If it writes-off a customer account balance of $1,900, what is the amount of its net accounts receivable?

$271,000

Accounts Receivable has a $3,450 balance, and the Allowance for Doubtful Accounts has a $300 credit balance. An $120 account receivable is written-off. Net receivables (net realizable value) after the write-off equals:

$3,150

On January 1, Portillo, Inc. lends a corporate customer $240,000 at 6% interest. The amount of interest revenue that should be recorded for the quarter ending March 31 equals:

$3,600

MacKenzie Manufacturing purchased equipment for $160,000. In addition, shipping charges of $2,000 were incurred to obtain the equipment. The company paid $12,500 to construct a foundation and install the equipment. The equipment is estimated to have a residual value of $15,000 at the end of its 5-year useful life.Using the straight-line method, what is the amount of depreciation expense each year?

$31,900 Depreciation expense = (Cost − Residual value) × (1 ÷ Useful Life)= [($160,000 + $2,000 + $12,500) − $15,000] × (1 ÷ 5) = $31,900 per year

Cody Enterprises purchased equipment for $70,000. In addition, shipping charges of $800 were incurred to obtain the equipment. The company paid $5,000 to construct a foundation and install the equipment. The equipment is estimated to have a residual value of $5,800 at the end of its 5-year useful life.Use the information above to answer the following question. Using the straight-line method, what is the book value of the equipment at the end of the third full year of use?

$33,800

Mills Corporation's balance sheet included the following information: Accounts Receivable $ 480,000Less: Allowance for Doubtful Accounts 63,000Accounts Receivable, Net of Allowance $ 417,000 If the Allowance account had a credit balance of $26,500 immediately before the year-end adjustment for bad debts and no accounts were written-off or allowed for during the year, what was the amount of Bad Debt Expense recognized during the year?

$36,500 = $63,000 − $26,500 + $0 − $0 = $36,500

The amount of uncollectible accounts at the end of the year is estimated to be $37,500, using the aging of accounts receivable method. The balance in the Allowance of Doubtful Accounts account is an $13,000 credit before adjustment. What is the adjusted balance of the Allowance for Doubtful Accounts at the end of the year?

$37,500. Ending balance in Allowance for Doubtful Accounts = Unadjusted credit (debit) balance in Allowance for Doubtful Accounts + Bad Debt Expense

Morten Co., which uses the double-declining-balance method of depreciation, purchased a new machine on January 1, 2018. The machine cost $160,000, had an estimated useful life of 8 years and $20,000 residual value at the end of its useful life.What is the depreciation expense for 2018?

$40,000 Depreciation expense = (Cost − Accumulated depreciation) × (2 ÷ Useful Life)= ($160,000 − $0) × (2 ÷ 8) = $40,000

Holly, Inc. has a building that originally cost $562,500. Holly expects to be able to sell the facility for $160,500 at the end of its useful life. The balance of the related Accumulated Depreciation account is $387,000. The depreciable cost of the facility is

$402,000

on jan 1, weldon Weston co. purchased equipment for $250,000, it has an estimated useful life of five years and its residual value $25,000. the company has a calendar year-end. using the straight-line method, depreciation expense for the first year of its life equals:

$45,00

durango inc. purchased a parcel of land for $450,000. it paid attorney fees of $3,000 to verify title to the land. in addition, it paid a broker's fee of $7,500 to help find a suitable parcel of land. this parcel of land should be recorded in the accounting records for:

$460,500

The unadjusted trial balance at the end of the year includes the following: Accounts Receivable $ 105,000Allowance for Doubtful Accounts 1,700 Both accounts have normal balances. The company uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $6,850. What is the amount of Bad Debt Expense to be recorded for the year?

$5,150 Bad Debt Expense = Ending balance in Allowance for Doubtful Accounts - Unadjusted ending credit (debit) balance in Allowance for Doubtful Accounts= $6,850 - $1,700 = $5,150

A piece of equipment was acquired on January 1, 2018, at a cost of $22,000, with an estimated residual value of $2,000 and an estimated useful life of four years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?

$5,500 Depreciation expense = Book value × (2 ÷ Useful life)Depreciation expense = (Cost − Accumulated depreciation) × (2 ÷ Useful life)2018:= ($22,000 − $0) × 2 / 4 = $11,0002019:= ($22,000 − $11,000) × 2 / 4 = $5,500Book value at end of 2019 = Cost − Accumulated depreciation= $22,000 − ($11,000 + $5,500) = $5,500

In October, you sign a note for $50,000 in order to buy new equipment. The note is due in five years, at 8% annual interest. Semiannual interest payments are due each March and September. Assuming no other long-term debt, what is the initial balance in the related long-term debt account?

$50,000

If a $40,000, 6%, note receivable with a two-year maturity date was signed three months ago, how much interest has been earned?

$600

Use the information above to answer the following question. What would be the amount of Darling's payroll check for the first week of January?

$683.80

On July 1, 2018, Empire Inc. lends $17,400 to a customer and receives a 8% note due in two years. Interest is due in full on July 1, 2020, the due date of the note. What is the amount of Interest Revenue that will be reported on Empire's income statement for the year ended December 31, 2018?

$696 Principal × Interest rate × Time= $17,400 × 0.08 × 6/12 (July 1 through December 31) = $696

On the maturity date of a $7,800, 3-month, 8% note, the borrower sends a check that includes the principal and all of the interest due on the note. What is the amount of the borrower's check?

$7,956 Payment = Principal + Interest$7,800 + $156 = $7,956.0

Gladstone company issues 111,000 shares of preferred stock for $41 a share. the stock has fixed annual dividend rate of 6% and a par value of $12 per share. if sufficient dividends are declared, preferred stockholders can anticipate receiving dividends of:

$79,920 each year

Tidy Limited purchased a new van on January 1, 2018. The van cost $20,000. It has an estimated life of Five years and the estimated residual value is $5,000. Tidy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

$8,000. Depreciation expense = Book value × (2 ÷ Useful life)Depreciation expense = (Cost − Accumulated depreciation) × (2 ÷ Useful life)= ($20,000 − $0) × 2 / 5 = $8,000 Book value at end of 2018 = Cost - Accumulated depreciation= $20,000 − $8,000 = $12,000 The book value at end of 2018 is greater than the residual value of $5,000. As such, the amount calculated is the amount of depreciation that can be taken.

Maple Broadcasting Co. lends $20,000 to an employee who signs a 9%, 6-month promissory note. What is the total amount of interest on this note?

$900

Which of the following is the depreciation formula for the revision of an estimate?

(Book value − New residual value) × (1 ÷ Remaining life)

on dec 31, 2018, a company had assets of $17 billion and stockholders' equity of $10 billion. that same company had assets of $25 billion and stockholders' equity of $10 billion as of dec 31. 2019. during 2019, the company reported total sales revenue of $10 billion and total expenses of $8 billion. what is the company's debt-to-assets ratio on dec 31, 2019?

.60

The primary goals of inventory managers are to:

1. Maintain a sufficient quantity of inventory to meet customers' needs 2. Ensure quality meets customers' expectations and company standards 3. Minimize the costs of acquiring and carrying the inventory

barbur inc. reported net income of $10.5625 million. during the year the average number of common shares outstanding was 3.25 million. the price of a share of common stock at the end of the year was $5. there were 500,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. the price/earnings ratio is approximately

1.54

beta company uses a periodic inventory system. the company bough 80 units of inventory for $12 each and 20 units of inventory for $12.50 each. it sold 90 units for $25 each. Betas weighted average cost is?

12.10

Wilshire Company purchased land for $120,000. The cost to demolish the existing building and prepare the land for a new building was $16,000. The real estate commission paid to buy the land was $7,200. What amount should be recorded in Wilshire's accounting records for the cost of the land?

143,200

Your company has net sales revenue of $51 million during the year. At the beginning of the year, fixed assets are $23 million. At the end of the year, fixed assets are $25 million. What is the fixed asset turnover ratio?

2.13

For a note receivable that was created on November 1, 2018 and is due for repayment on October 31, 2019, what is the time fraction needed to compute interest revenue for the year ended December 31, 2018?

2/12

What is the annual rate of interest being charged on a 9-month note receivable of $63,000 if the total interest is $1,890?

4% Interest Rate = Interest ÷ (Principal × Time)= $1,890 ÷ ($63,000 × 9/12) = 0.04 or 4%

Your company buys a computer server that it expects to use for eight years and then sell when it upgrades to a more powerful model. The server would probably be used by the business that buys it at that time for another three years. The useful life of the server for your company is:

8 years

a corporate charter specifies that the company may sell up to 21 million shares of stock. the company sells 13 million shares to investors and later buy back 3.5 million shares. the current number of outstanding shares after these transactions have been accounted for is:

9.5 million shares

On October 1, a company lends $10,000 to an employee who signs a 9%, 6-month promissory note. The company is preparing its year-end financial statements on December 31. No adjusting entries have been recorded in connection with this note. What adjusting entry should be recorded before the financial statements are prepared? A) Debit Interest Revenue and credit Interest Receivable for $225 B) Debit Interest Receivable and credit Interest Revenue for $450 c) Debit Interest Revenue and credit Interest Receivable for $450 D) Debit Interest Receivable and credit Interest Revenue for $225

D) Debit Interest Receivable and credit Interest Revenue for $225

Payroll taxes paid by employees include which of the following?

D) Federal income tax withheld, state income tax withheld, and Medicare

A company typically records the amount owed to suppliers for goods or services when:

D) the goods or services are received.

Kata Company uses the allowance method. On May 1, Kata wrote off a $22,000 customer account balance when it becomes clear that the particular customer will never pay. The journal entry to record the write-off on May 1 would include which of the following?

Debit to Allowance for Doubtful Accounts and credit to Accounts Receivable.

Which of the following costs associated with long-lived assets are expensed (rather than capitalized)?

Interest on loans to purchase the assets

if inventory costs have been falling during the year, which cost method results in the highest gross profit for the year?

LIFO

which of the following statements are correct?

LIFO results in a higher net income than FIFO when costs are falling

Sheridan Manufacturing purchased a new building with the surrounding land. The price paid was $2,400,000, including the commission charged on the sale. An appraisal of the land and building at the time of purchase indicated that the market value of the land was $2,000,000 and the market value of the building was $1,000,000. What amounts would be recorded for the purchase of the two assets?

Land $1,600,000, Building $800,000

A company bought land and a building for $128,000. The building has a useful life of 20 years. Why should the company split the $128,000 cost between the land and the building?

Land is not depreciated, while the building will be depreciated over its 20-year useful life.

A trucking company sold its fleet of trucks for $55,000. The trucks originally cost $1,410,000 and had Accumulated Depreciation of $1,269,000 recorded through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks?

Loss of $86,000.Book value = $1,410,000 − $1,269,000 = $141,000Gain (loss) on disposal = Proceeds − Book Value= $55,000 − $141,000 = ($86,000)

A company lends its supplier $163,000 for 3 years at a 7% annual interest rate. Interest payments are to be made twice a year. The entry to record this lending transaction includes a debit to:

Notes Receivable and a credit to Cash for $163,000.

Which of the following statements about straight-line depreciation is correct?

Straight-line depreciation is the most common method of depreciation used in the U.S. for financial reporting, but is not commonly used for taxes.

On January 1, 2018, Dunbar Echo Co. sells a machine for $46,000. The machine was originally purchased on January 1, 2016 for $80,000. The machine was estimated to have a useful life of 5 years and a residual value of $0. Dunbar Echo uses straight-line depreciation. In recording this transaction:

a loss of $2,000 would be recorded. Annual depreciation expense = (Cost − Residual value) × (1 ÷ Useful life)= ($80,000 − $0) × (1 ÷ 5) = $16,000Accumulated depreciation = 2016 depreciation expense + 2017 depreciation expense= $16,000 + $16,000 = $32,000Gain (loss) on disposal = Proceeds from sale − Book value at time of saleGain (loss) on disposal = Proceeds from sale − (Cost − Accumulated depreciation at time of sale)= $46,000 − ($80,000 − $32,000) = ($2,000)

On December 31, 2018, a company had assets of $35 billion and stockholders' equity of $30 billion. That same company had assets of $49 billion and stockholders' equity of $11 billion as of December 31, 2019. During 2019, the company reported total sales revenue of $28 billion and total expenses of $26 billion. What is the company's debt-to-assets ratio on December 31, 2019? a. 0.78 b. 0.22 c. 0.053 d. 0.056

a. 0.78 Liabilities = Assets − Stockholders' equity= $49 billion − $11 billion = $38 billion Debt-to-assets ratio = Total liabilities ÷ Total assets= $38 billion ÷ $49 billion = 0.78

Cedar Mill, Inc. uses the Aging of Accounts Receivable method for estimating uncollectible accounts. The accounting records show the following information at the end of the year: Number of Days Unpaid 0 - 30 31 - 60 61 - 90 Over 90 Accounts Receivable$740,000 $480,000 $220,000 $160,000 Estimated % Uncollectible 5% 10% 15% 25% If the unadjusted credit balance in the Allowance for Doubtful Accounts account before is $30,000, what would be the amount of the adjustment for bad debts? a. 128000 b. 158000 c. 90000 d. 69000

a. 128000 5% 10% 15% 25% Estimated Uncollectible $37,000 $48,000 $33,000 $40,000 total: $158,000158000-30000

a. 2100 Depreciation expense per year = (Cost − Residual value) × (1 ÷ Useful life)= ($24,000 − $3,000) × 1 / 10 = $2,100

a. 27,200

Pebble Beach Co. buys a piece of equipment for $24,000. The equipment has a useful life of ten years. No residual value is expected at the end of the useful life. Using the double-declining-balance method, what is the company's depreciation expense in the first year of the equipment's useful life? a. 4800 b. 6000 c. 2400 d. 12000

a. 4800 Depreciation expense = Book value × (2 ÷ Useful life)Depreciation expense = (Cost − Accumulated depreciation) × (2 ÷ Useful life)= ($24,000 − $0) × 2 / 10 = $4,800

Sales tax collected by a company is normally reported as: a. a current liability b. income tax expense c. an asset d. an operating expense

a. a current liability

Tangible assets are first recorded at: a. all costs to acquire them and prepare them for use b. current market value or resale value c. the amount of cash paid for them d. cost minus residual (or salvage) value

a. all costs to acquire them and prepare them for use

The entry to record the initial borrowing of cash by issuing a promissory note will include a debit to ________ and a credit to ________. a. cash; notes payable b. notes payable; cash c. interest expense; cash d. cash; interest expense

a. cash; notes payable

which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

accounts receivable

Tangible assets are first recorded at:

all costs to acquire them and prepare them for use.

Accumulated Depreciation:

appears in the asset section of a balance sheet.

Ordinary repairs and maintenance:

are recorded as expenses

Payroll Deductions

are the amounts subtracted from gross income which results in your net income

Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $5,600. At the end of the year, the balance of Accounts Receivable is $106,000 and the unadjusted debit balance of the Allowance for Doubtful Accounts is $620. Credit sales during the year totaled $162,000. What is the estimated Bad Debt Expense for the current year? a) $5,600. b) $6,220. c) $7,720. d) $4,980.

b. $6,220 = Estimated uncollectible + Debit balance in allowance for doubtful accounts = $5,600 + $620 = $6,220

Maple Broadcasting Co lends $20,000 to an employee who signs a 9%, 6-month promissory note. What is the total amount of interest on this note? a. $1800 b. $900 c. $20,900 d. $5400

b. $900

The adjusting entry to record the estimated bad debts in the period credit sales occur would normally include a debit to: a. accounts receivable and a credit to allowance for doubtful accounts b. bad debt expense and a credit to allowance for doubtful accounts c. allowance for doubtful accounts and a credit to accounts receivable d. bad debt expense and a credit to accounts receivable

b. bad debt expense and a credit to allowance for doubtful accounts

The potential disadvantages of extending credit include all of the following except: a. increased bad debt costs b. customers buying too much c. the need to hire employees to undertake collection efforts d. higher wage costs in the accounting department

b. customers buying too much

which of the following statements about bonds and notes is not correct?

bonds payable and notes payable are always classified as concurrent liability accounts

what do merchandisers do?

buy finished goods and sell finished goods

What do manufacturers do?

buy raw materials, produce and sell finished goods

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850. The journal entry to record wages paid includes a: a. $100,000 credit to salaries and wages payable b. $6,700 debit to FICA payable c. $100,000 debit to salaries and wages expense d. $70,000 debit to salaries and wages expense

c. $100,000 debit to salaries and wages expense

Libre. Inc has experienced bad debit losses of 5% of credit sales in prior periods. At the end of the year, the balance of Accounts Receivable is $121,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,550. Net credit sales during the year were $192,000. Using the percentage of credit sales method, what is the estimated Bad Debit Expense for the year? a. $6,050 b. $9,100 c. $9,600 d. $10,100

c. $9,600 Credit Sales * Estimated % of bad debt = $192,000 * 5% = $9,600

The amount of uncollectible amounts of the year is estimated to be $25,000, using the aging of accounts receivable method. The balance in the Allowance for Doubtful Accounts is an $8,000 credit before any adjustments. What is the adjusted balance in this account after adjustments are made? a. 8000 b. 25000 c. 17000 d. 33000

c. 17000

A one-year, $15,000, 6% note is signed on April 1. If the note is repaid on September 1 of the same year, how much interest expense is incurred? a. 900 b. 450 c. 375 d. 300

c. 375

Payroll deductions: a. are amounts added to employees' gross earnings to determine their net pay b. all voluntary increase the amount of cash an employee receives c. are amounts subtracted from employees' gross earnings to determine their net pay d. are all accounted for as expenses

c. are amounts subtracted from employees' gross earnings to determine their net pay

Employment Payroll taxes: a. represent the federal taxes withheld from the employees' paychecks b. are the amounts paid by the employee c. are an added payroll expense beyond the wages and salaries earned by employees d. represent the FICA taxes withheld from the employees' paychecks

c. are an added payroll expense beyond the wages and salaries earned by employees

On November 1, 2018, Sky Mountain Co. borrowed $200,000 cash on a 1-year, 6% note payable that requires Sky Mountain to pay both principal and interest on October 31, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sky Mountain's year-end, would include a: a. credit to Cash of $2,000. b. debit to Interest Expense of $12,000. c. credit to Interest Payable of $2,000. d. credit to Note Payable of $2,000.

c. credit to Interest Payable of $2,000.

On November 1, 2018, Sky Mountain Co. borrowed $200,000 cash on a 1-year, 6% note payable that requires Sky Mountain to pay both principal and interest on October 31, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sky Mountain's year-end, would include a: a. credit to cash of $2000 b. debit to interest expense of 12000 c. credit to interest payable of 2000 d. credit to note payable of 2000

c. credit to interest payable of 2000 The amount of interest expense that has accrued for the months of November and December 2018 is computed as follows: $200,000 × 0.06 × 2 / 12 = $2,000. Since interest has accrued but has not yet been paid, Interest Expense must be debited and Interest Payable must be credited for $2,000.

If a company expenses costs that should be capitalized, how is its income statement for the current period impacted? a. net income is overstated b. revenues are understated c. expenses are overstated d. assets are overstated

c. expenses are overstated

The three key pieces of information that are stated on a bond certificate are the: a. interest payment, the face value of the bond, and the credit rating of the company b. market interest rate, the price of the bond, and the maturity date c. stated interest rate, the face value of the bond, and the maturity date d. interest payment, the issue price of the bond, and the credit rating of the company

c. stated interest rate, the face value of the bond, and the maturity date

which of the following would be included in cash flows from investing activities?

cash used to purchase equipment

At the end of the first year of an asset's life, the declining-balance depreciation:

causes an asset to be carried at a lower book value than that computed using the straight-line method.

which of the following will result in the recording of goodwill?

company A purchases company B and pays more than the fair value of company B's assets and liabilities

Accumulated Depreciation is a:

contra asset account

Loma Linda, Inc. sells a long-lived asset that originally cost $202,000 for$52,000 on Dec 1, 2018. The accumulated Depreciation account had a balance of $111,000 after the current year's depreciation of $45,200 had been recorded. the company should recognize a: a. $99,600 loss on sale b. $39,000 gain on sale c. $24,000 loss on sale d. $39,000 loss on sale

d. $39,000 loss on sale Selling Price = $ 52,000 Book Value as on date of Sale = Cost - Accumulated Depreciation = $ 202000- $ 111000 = $ 91,000 Since, the Selling Price is less than the Book Value as on date of Sale, the company must record a loss Loss = Book Value as on date of Sale -Selling Price = $ 91,000 - $ 52,000 = $ 39,000

Assume Zap Industries reported the following adjusted account balances at year-end2019 2018Accounts Receivable$2,496,320 $1,937,472 Allowance for Doubtful Accounts (126,400) (103,360) Accounts Receivable, Net$2,369,920 $1,834,112. Assume the company recorded no write-offs or recoveries during 2019. What was the amount of Bad Debt Expense reported in 2019? a. 126,499 b. 103,360 c. 46,080 d. 23,040

d. 23,040Ending balance in Allowance for Doubtful Accounts = Beginning credit balance in Allowance for Doubtful Accounts − Write-offs + Bad Debt Expense Bad Debt Expense = Ending balance in Allowance for Doubtful Accounts − Beginning balance in Allowance for Doubtful Accounts + Write-offs= $126,400 − $103,360 + $0 = $23,040

A contingent liability is: a. always a specific amount b. an obligation arising from the purchase of goods or services on credit c. an obligation not requiring a future payment d. a potential obligation that depends on a future event

d. a potential obligation that depends on a future event

The Allowance for Doubtful Accounts account is a contra-account that offsets: a. bad debt expense b. cash c. net income d. accounts receivable

d. accounts receivable

Which of the following is not a characteristic of tangible long-lived assets? a. productive b. used over one or more years c. not intended for resale d. amortized over their useful lives

d. amortized over their useful lives

Which of the following terms does not mean the same thing as the others? a. tangible assets b. fixed assets c. property, plant, and equipment d. long-lived assets

d. long-lived assets

The journal entry to record the amortization of an intangible asset includes a:

debit to Amortization Expense.

The adjusting entry to record the allowance for doubtful accounts includes a:

debit to bad debt expense

Bakersfield corp. pays income tax at an average rate of 40 percent. this year its revenue is $140,000 and its expenses are $90,000. the adjusting entry to record the income tax expense will:

decrease stockholders' equity by $20,000

An asset is purchased on January 1 for $41,200. It is expected to have a useful life of four years after which it will have an expected residual value of $5,300. The company uses the straight-line method. If it is sold for $30,600 exactly two years after it is purchased, the company will record a:

gain of $7,350. Annual depreciation expense = (Cost − Residual value) × (1 ÷ Useful life)= ($41,200 − $5,300) × (1 ÷ 4) = $8,975 Accumulated depreciation = Year 1 depreciation expense + Year 2 depreciation expense= $8,975 + $8,975 = $17,950 Gain (loss) on disposal = Proceeds from sale - Book value at time of sale Gain (loss) on disposal = Proceeds from sale − (Cost − Accumulated Depreciation at time of sale)= $30,600 − ($41,200 − $17,950) = $7,350

The assumption that a company makes about its inventory cost flow can affect cost of goods sold on its ________ and inventory on its ________ .

income statement: balance sheet

company A uses am accelerated depreciation method while company B uses the straight-line method. all other things being equal, during the first few years of the asset's use, company A will show which of the following compared to company B?

lower asset values and lower net income

what are the types of inventory

merchandisers, manufacturers

if a fully depreciated asset with no residual value is "retired" to a junk yard without receiving any cash:

no gain or loss on disposal will be recorded

which of the following journal entries has an effect on cash provided by (used in) operating activities?

payment of interest on long-term notes payable

which of the following would not be affected by the choice of an inventory costing method (that is, choosing between LIFO, FIFO, Weighted average, and Specific identification)?

sales revenue

A gain on the disposal of an asset occurs when the:

selling price is greater than the asset's book value.

countryside corporation is owed $11,890 from a customer for landscaping. the account is overdue and the customer is having difficulty paying. countryside might ask the customer to sign a note for the unpaid amount to:

strengthen countryside corporation's legal right to be repaid with interest

When the allowance method is used, the entry to record the write-off of specific uncollectible accounts would decrease:

the Allowance for Doubtful Accounts account.

An asset's residual value is:

the estimated amount it can be sold for at the end of its useful life.

what is the purpose of the closing process?

to prepare the accounting records so they are ready to track results for the following year

acct test 3

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