1) On June 15, 2017 Santos Corporation accepted delivery of merchandise which it purchased on account. As of June 30 Santos had not recorded the transaction or included the merchandise in its inventory. The effect of this error on its balance sheet for June 30, 2017 would be

A) assets and stockholders equity were overstated but liabilities were not affected.

B) stockholders equity was the only item affected by the omission.

C) assets and liabilities were understated but stockholders equity was not affected.

D) assets and stockholders equity were understated but liabilities were not affected.

2) When the sum-of-the-years'-digits method is used, depreciation expense for a given asset will

A) decline by a constant amount each year

B) be the same each year.

C) decrease rapidly and then slowly over the life of the asset.

D) vary from year to year in relation to changes in output.

3) Sweetheart Company purchased a new piece of equipment on July 1, 2017 at a cost of $2,100,000. The equipment has an estimated useful life of 5 years and an estimated salvage value of $150,000. The current year end is 12/31/18. Sweetheart records depreciation to the nearest month.

What is double-declining-balance depreciation for 2018?

A) $672,000. B) $690,000. C) $660,000.

D) $720,000.

If, at the end of 2018, Sweetheart Company decides the equipment still has five more years of life beyond 12/31/18, with a salvage value of $150,000, what is straight-line depreciation for 2019? (Assume straight-line used in all years.)

A) $273,000.

B) $192,500

C) $251,000.

D) $281,000.

4) Samantha Company purchased equipment for $36,000. Sales tax on the purchase was $2,400. Other costs incurred were freight charges of $600, repairs of $350 for damage during installation, and installation costs of $675. What is the cost of the equipment?

A) $36,000

B) $38,400

C)$39,675

D) $40,725

5) Sonia Corporation constructed a building at a cost of $20,000,000. Weighted- average accumulated expenditures were $8,000,000, actual interest was $800,000, and avoidable interest was $400,000. If the salvage value is $1,600,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is

A) $470,000.

B) $490,000.

C) $510,000.

D) $670,000.

6) Kasper Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $4,800,000 on March 1, $4,920,000 on June 1, and $6,000,000 on December 31. Kasper Company borrowed $2,400,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $4,800,000 note payable and an 11%, 4-year, $9,000,000 note payable. What are the weighted-average accumulated expenditures?

A) $6,520,000

B) $6,310,000

C) $14,760,000

D) $6,870,000

7) Hanne Inc. borrowed $400,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31?

A) $0.

B) $48,000.

C) $32,000.

D) $36,000.