Cost minus residual
value divided by useful life, in years, is the formula for the:
A.
doubleminus−decliningminus−balance
depreciation method.
B.
modified accelerated
cost recovery method.
C.
unitsminus−ofminus−production
depreciation method.
D.
straightminus−line
depreciation
method.
Bonds with a 6%
interest rate were issued when the market rate of interest was 7%. The
quoted bond price will be:
A.
100.
B.
greater than 1000.
C.
greater than 100.
D.
less than
100.
The most frequently used
current liabilities are:
A.
accounts payable,
accounts receivable, and accrued liabilities.
B.
cash, notes payable,
and accrued liabilities.
C.
accounts payable, notes payable, and accrued
liabilities.
D.
accounts payable, notes payable, and
inventories.
Wisconsin Bank lends
Local Furniture Company
$ 200 comma 000$200,000
on November 1. Local
Furniture Company signs a
$ 200 comma 000$200,000,
1212%,
4minus−month
note. The fiscal year
end of Local Furniture Company is December 31. The journal entry made by Local
Furniture Company on December 31 is:
A.
debit Interest Expense
and credit Cash for $ 4 comma 000$4,000
B.
debit Interest Payable
and credit Cash for $ 4 comma 000$4,000
C.
debit Interest Payable
and credit Interest Expense for $ 4 comma 000$4,000
D.
debit
Interest Expense and credit Interest Payable for $ 4 comma 000
The carrying amount of
bonds issued at a discount is calculated by:
A.
subtracting Interest
Payable from Bonds Payable.
B.
subtracting the sum of
Discount on Bonds Payable and Interest Payable from Bonds Payable.
C.
subtracting Discount on Bonds Payable from Bonds Payable.
D.
subtracting Interest Expense from Bonds Payable.
Treating a capital
expenditure as an immediate expense:
A.
understates assets and
overstates stockholders' equity in the year of the error.
B.
overstates assets and
understates stockholders' equity in the year of the error.
C.
understates assets and stockholders' equity in the
year of the error.
D.
overstates assets and stockholders' equity
in the year of the error.
If bonds are issued at a discount,
it means that the:
A.
financial strength of
the issuer is weak.
B.
market interest rate is
lower than the stated interest rate.
C.
bond is convertible.
D.
market
interest rate is higher than the stated interest rate.
Maybelline Corporation
issues
$ 3 comma 000 comma 000$3,000,000,
10minus−year,
66%
bonds dated January 1 at
102102.
The journal entry to
record the issuance will include a:
A.
credit to Premium on Bonds Payable for
$ 60 comma 000$60,000.
B.
debit to Cash for
$ 3 comma 000 comma 000$3,000,000.
C.
credit to Bonds Payable
for
$ 3 comma 060 comma 000$3,060,000.
D.
credit to Cash for
$ 3 comma 060 comma 000$3,060,000.
Kathy's Corner Store
has total cash sales for the month of
$ 36 comma 000$36,000
excluding sales taxes.
If the sales tax rate is
44%,
which journal entry is needed?
(Ignore Cost of Goods Sold.)
A.
debit Cash
$ 34 comma 560$34,560,
debit Sales Tax
Receivable for
$ 1 comma 440$1,440
and credit Sales Revenue
for $ 36 comma 000$36,000
B.
debit Cash
$ 37 comma 440$37,440,
credit Sales Revenue $
37 comma 440$37,440
C.
debit Cash
$ 37 comma 440$37,440,
credit Sales Revenue
$ 36 comma 000$36,000
and credit Sales Tax Payable $ 1 comma 440$1,440
D.
debit Cash
$ 36 comma 000$36,000
and credit Sales Revenue $ 36 comma 000
Minor Company purchased
land which is being prepared for the construction of a new office building.
Which of the following should be included in the cost of the land?
A.
cost of removing an old
building
B.
cost of clearing and
grading the land
C.
cost of the fence which
surrounds the property
D.
A and B
A
$ 8 comma 000$8,000,
77%
bond is sold at
9292.
When the bond is issued,
the Cash account will be increased by:
A.
$ 7 comma 920$7,920.
B.
$ 8 comma 640$8,640.
C.
$ 8 comma 000$8,000.
D.
$ 7 comma
360$7,360.
To record the accrued
interest on a note payable at the end of the accounting period, a journal
entry should be written to credit:
A.
Interest Expense
B.
Cash
C.
Interest Payable
D.
Notes Payable
Monthly sales are
$ 470 comma 000$470,000.
Warranty costs are estimated
at
66%
of monthly sales.
Warranties are honored with replacement products. No defective products are
returned during the month. At the end of the month, the company should
record a journal entry with a credit to:
A.
Estimated Warranty Payable for
$ 28 comma 200$28,200.
B.
Warranty Expense for
$ 28 comma 200$28,200.
C.
Inventory for
$ 28 comma 200$28,200.
D.
Sales for
$ 28 comma 200$28,200.
According to FASB,
when should a company journalize a contingent liability?
A.
Journalize the
contingent liability, even though you will probably win the lawsuit.
B.
Journalize the contingent
liability only if the amount can be estimated and the probability of loss is
reasonably possible.
C.
Do not journalize the
contingent liability under any circumstances.
D.
Journalize
the contingent liability if it is probable that the loss will occur, and
the amount of the loss can be reasonably estimated.
A bond was issued at
par. The journal entry to record payment of this bond payable at maturity will
include a:
A.
debit to Bonds Payable,
credit to Discount on Bonds Payable and a credit to Cash.
B.
debit to Bonds Payable and a credit to Cash.
C.
debit to Bonds Payable,
debit to Discount on Bonds Payable and a credit to Cash.
D.
debit to Cash and a credit to Bonds Payable.
On January 2,
2019, Mumford Corporation acquired equipment for
$ 70 comma 000$70,000.
The estimated life of
the equipment is 4 years. The estimated residual value is
$ 4 comma 000$4,000.
What is the amount of
depreciation expense for 2020, if the company uses the
doubleminus−decliningminus−balance
method of depreciation?
(Round intermediary calculations to two decimal places and your final answer to
the nearest dollar.)
A.
$ 33 comma 000$33,000
B.
$ 17 comma 500$17,500
C.
$ 35 comma 000$35,000
D.
$ 16 comma 500
Employers must match
employee contributions (up to a maximum amount) for:
A.
social security.
B.
income tax.
C.
medicare.
D.
A and C.
On January 2,
2019, Konrad Corporation acquired equipment for
$ 600 comma 000$600,000.
The estimated life of
the equipment is 5 years or
37 comma 00037,000
hours. The estimated
residual value is
$ 8 comma 000$8,000.
If Konrad Corporation
uses the units of production method of depreciation, what will be the
debit to Depreciation Expense for the year ended December 31, 2020,
assuming that during this period, the asset was used
7 comma 0007,000
hours?
A.
$ 112 comma 000$112,000
B.
$ 115 comma 027$115,027
C.
$ 118 comma 400$118,400
D.
$ 113 comma 514
Montana Company sold
merchandise with a retail price of
$ 35 comma 000$35,000
for cash. Montana
Company is required to collect
44%
state sales tax. The
total cash received from customers was:
A.
$ 36 comma 400$36,400.
B.
$ 33 comma 600$33,600.
C.
$ 35 comma 000$35,000.
D.
$ 1 comma 400$1,400.
Land is purchased for
$ 500 comma 000$500,000.
Back taxes paid by the
purchaser were
$ 7 comma 200$7,200;
total costs to demolish
an existing building were
$ 10 comma 000$10,000
and the cost to clear
the land was
$ 15 comma 000$15,000.
The cost of paving the
parking lot was
$ 7 comma 600$7,600.
The cost of land is ________
and the cost of land improvements is ________.
A.
$ 532 comma 600$532,600;
$ 7 comma 200$7,200
B.
$ 539 comma 800$539,800;
$0
C.
$ 517 comma 200$517,200;
$ 22 comma 600$22,600
D.
$ 532 comma 200$532,200;
$ 7 comma
600
Tony Company sells
equipment for
$ 20 comma 000$20,000
cash. The equipment has
a historical cost of
$ 62 comma 000$62,000
and accumulated
depreciation of
$ 54 comma 000$54,000.
What is the gain or loss
on sale of the equipment?
A.
$ 20 comma 000$20,000
gain
B.
$ 12 comma 000$12,000
loss
C.
$ 12 comma 000$12,000
gain
D.
$ 20 comma 000$20,000
loss
On January 2,
2019, Kellogg Corporation acquired equipment for
$ 400 comma 000$400,000.
The estimated life of
the equipment is 5 years or
40 comma 00040,000
hours. The estimated
residual value is
$ 20 comma 000$20,000.
What is the book value
of the asset on December 31, 2020, if Kellogg Corporation uses the
straightminus−line
method of depreciation?
(Round any intermediary calculations to two decimal places and your final
answer to the nearest dollar.)
A.
$ 324 comma 000$324,000
B.
$ 400 comma 000$400,000
C.
$ 248 comma 000$248,000
D.
$ 380 comma 000
A company incurred the
following costs for a new delivery truck:
|
Purchase price
|
$ 160 comma 000$160,000
|
|
Sales tax
|
6 comma 2006,200
|
|
Delivery charge from seller's
location
|
1 comma 9001,900
|
|
Special racks for
storage
|
3,000
|
|
Normal repairs to the
truck before it was used for the first time
|
1,100
|
|
Signs painted on the
truck
|
2,000
|
|
Insurance on truck
before it was used for the first time
|
3,000
|
What is the cost of the
delivery truck?
A.
$ 177 comma 200$177,200
B.
$ 173 comma 100$173,100
C.
$ 168 comma 100$168,100
D.
$ 170 comma 100
Smith Corporation issues
$ 2 comma 500 comma 000$2,500,000,
10minus−year,
66%
bonds payable at a price
of
9898.
The journal entry to
record the issuance will include a:
A.
debit to Cash of
$ 2 comma 500 comma 000$2,500,000.
B.
credit to Bonds Payable
for
$ 2 comma 450 comma 000$2,450,000.
C.
debit to Cash for
$ 2 comma 450 comma 000$2,450,000.
D.
credit to Discount on
Bonds Payable for
$ 50 comma 000$50,000.
Costs that maintain a
plant asset in its present condition should be ________. Costs that
restore a plant asset to working order or its prior condition should be ________.
A.
capitalized;
capitalized
B.
expensed; capitalized
C.
expensed; expensed
D.
capitalized; expensed
Illinois Bank lends
Lisle Furniture Company
$ 90 comma 000$90,000
on December 1. Lisle
Furniture Company signs a
$ 90 comma 000$90,000,
66%,
4minus−month
note. The total cash
paid at maturity of the note is: (Round your final answer to the nearest dollar.)
A.
$ 91 comma 800$91,800.
B.
$ 95 comma 400$95,400.
C.
$ 90 comma 000$90,000.
D.
$ 92 comma 700$92,700.
Godwin Corporation
retires its bonds at
105105
on January 1,
after the payment of interest. The face value of the bonds is
$ 550 comma 000$550,000.
The carrying value of
the bonds at retirement is
$ 572 comma 500$572,500.
The entry to record the
retirement will include a:
A.
debit of
$ 27 comma 500$27,500
to Premium on Bonds
Payable.
B.
credit of
$ 5 comma 000$5,000
to Loss on Retirement of
Bonds.
C.
debit of
$ 22 comma 500$22,500
to Premium on Bonds Payable.
D.
credit of
$ 5 comma 000$5,000
to Gain on Retirement of Bonds.
Miscellaneous costs
associated with the purchase of new equipment include:
|
Insurance costs before
the equipment is ready for use
|
$ 3 comma 000$3,000
|
|
Maintenance costs
before the equipment is ready for use
|
800800
|
|
Insurance costs after
the equipment is placed into service
|
1 comma 2001,200
|
|
Cost of test run
|
600600
|
|
Training costs for
employees to learn how to use equipment
|
500500
|
What is the amount
assigned to the new equipment?
A.
$ 4 comma 100$4,100
B.
$ 6 comma 100$6,100
C.
$ 4 comma 900$4,900
D.
$ 4 comma 400
Nationwide Magazine
sells
65 comma 00065,000
subscriptions on account
in March. The subscription price is
$ 13$13
each. The subscriptions
start in April. The journal entry in March would include a:
A.
debit to Unearned
Subscription Revenue for
$ 845 comma 000$845,000.
B.
credit to Unearned Subscription Revenue for
$ 845 comma 000$845,000.
C.
credit to Cash for
$ 845 comma 000$845,000.
D.
debit to prepaid
subscriptions for
$ 845 comma 000$845,000.
On January 2,
2019, Kaiman Corporation acquired equipment for
$ 800 comma 000$800,000.
The estimated life of
the equipment is 5 years or
60 comma 00060,000
hours. The estimated
residual value is
$ 10 comma 000$10,000.
What is the balance in
Accumulated Depreciation on December 31, 2020, if Kaiman Corporation uses
the
straightminus−line
method of depreciation?
A.
$ 158 comma 000$158,000
B.
$ 320 comma 000$320,000
C.
$ 160 comma 000$160,000
D.
$ 316
comma 000
Cubs Corporation issues
$ 490 comma 000$490,000,
99%,
55minus−year
bonds on January 1,
2019 for
$ 479 comma 000$479,000.
Interest is paid
annually on January 1. If Cubs Corporation uses the
straightminus−line
method of amortization
of bond discount, the amount of interest expense recorded at December 31,
2019 would be:
A.
$ 11 comma 000$11,000.
B.
$ 44 comma 100$44,100.
C.
$ 41 comma 900$41,900.
D.
$ 46
comma 300$46,300.
Madison Bank lends
Neenah Paper Company
$ 80 comma 000$80,000
on January 1,
2017. Neenah signs a
$ 80 comma 000$80,000,
55%,
6minus−month
note. The journal entry
made by Neenah on January 1, 2017 will debit:
A.
Interest Expense for
$ 4 comma 000$4,000
and credit Cash for
$ 4 comma 000$4,000.
B.
Interest Expense for
$ 4 comma 000$4,000
and credit Interest
Payable for
$ 4 comma 000$4,000.
C.
Cash for
$ 76 comma 000$76,000
and credit Note Payable
for
$ 76 comma 000$76,000.
D.
Cash for
$ 80 comma 000$80,000
and credit Notes Payable for
$ 80
comma 000$80,000.
Over the term of the bonds,
the balance in the Premium on Bonds Payable account will:
A.
decrease.
B.
increase.
C.
increase or decrease if
the market is unstable.
D.
not change until the bonds mature.
The correct answer highlighted in yellow. All answer are correct expect one. Thank you!
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