1. Which of the following is not properly classified as property, plant, and equipment?

a. Building used as a factory

b. Land used in ordinary course of business

c. A truck held for resale by an automobile dealership

d. Land improvement, such as parking lots and fences

2. A company purchased land for $72,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building were $1,200. Under the cost principle, the cost of land would be recorded at:

a. $82,800

b. $72,000

c. $77,800

d. $84,000

3. Givens Retail purchased land for a new parking lot for $25,000. The paving cost $35,000 and the lights to illuminate the new parking area cost $12,000. Which of the following statements is true with respect to these additions?

a. $60,000 should be debited to the Land account.

b. $47,000 should be debited to Land Improvements.

c. $72,000 should be debited to the Land account.

d. $72,000 should be debited to Land Improvements.

4. Which of the following is included in the cost of constructing a building?

a. Cost of paving a parking lot.

b. Cost of repairing vandalism damage incurred shortly after construction is complete.

c. Interest incurred during construction.

d. Cost of removing the demolished building existing on the land when it was purchased.

5. Which of the following statements is TRUE?

a. depreciation is an asset valuation process.

b. depreciation does not apply to land improvements.

c. recognizing depreciation results in the accumulation of cash for asset replacement.

d. depreciation does not apply to land.

6. Jack's Copy Shop bought equipment for $60,000 on January 1, 2019. Jack originally estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2020, one year later, Jack decides that the business will use the equipment for a total of 5 years, instead of the original 3 year life. What is the revised depreciation expense for 2020?

a. $20,000

b. $15,000

c. $10,000

d. $ 8,000

USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT 9 QUESTIONS.

On January 1, 2019, ROK Corporation acquired a machine for $60,000. The machine has an estimated useful life of 4 years and a salvage value of $4,000. The machine is expected to last a total of 200,000 hours. The machine was used for 50,000 hours in 2019 and for 40,000 hours in 2020. Using the above information, calculate the following: DO NOT USE $ OR CENT BUT USE COMMAS.

Using the Straight-line depreciation method:

7. What is the depreciation expense for 2019 (year 1)?

Using the Straight-line depreciation method:

8. What is the accumulated depreciation on December 31, 2020 (year 2)?

Using the Straight-line depreciation method:

9. What is the Book Value on December 31, 2020 (year 2)?

Using the Double-Declining Balance depreciation method:

10. What is the depreciation expense for 2019 (year 1)?

Using the Double-Declining Balance depreciation method:

11. What is the accumulated depreciation on December 31, 2020 (year 2)?

Using the Double-Declining Balance depreciation method:

12. What is the Book Value on December 31, 2020 (year 2)?

Using the Units-of-Activity depreciation method:

13. What is the depreciation expense for 2019 (year 1)?

Using the Units-of-Activity depreciation method:

14. What is the accumulated depreciation on December 31, 2020 (year 2)?

Using the Units-of-Activity depreciation method:

15. What is the Book Value on December 31, 2020 (year 2)?

16. Which of the following statements regarding ordinary repairs and capital expenditures is FALSE?

a. Ordinary repairs are expensed and capital expenditures are recorded as an asset and depreciated.

b. An new engine for a truck would be considered a capital expenditure.

c. Replacing a worn out gear in a piece of equipment would be considered an ordinary repair.

d. Capital expenditures maintain the operating efficiency of an asset.

17. A gain or loss on disposal of a plant asset is determined by comparing the:

a. replacement cost of the asset with the asset's original cost.

b. book value of the asset with the asset's original cost.

c. original cost of the asset with the proceeds received from its sale.

d. book value of the asset with the proceeds received from its sale.

18. Use the following information to answer the following 3 questions

ROK Corporation acquires a machine on January 1, 2008. The machine cost $100,000 and has a useful life of 10 years, with no salvage value, and is depreciated using the straight-line method.

Assuming the machine is worthless and dropped off at the junk yard after 9 years, the journal entry to record the disposal of this asset would include a:

a. credit to Gain on Disposal of Machine for $10,000.

b. debit to Loss on Disposal of Machine for $10,000.

c. No Gain or Loss would be recorded.

d. credit to Accumulated Depreciation for $90,000.

19. Assuming the machine is sold for $50,000 on December 31, 2010, the journal entry to record this sale would include a:

a. credit to Accumulated Depreciation for $30,000

b. credit to Gain on Disposal of $20,000

c. debit to Loss on Disposal of $20,000

d. credit to Equipment for $70,000

20. Assuming the machine is sold for $80,000 on December 31, 2010, the journal entry to record this sale would include a:

a. debit to Loss on Disposal of $20,000

b. debit to Loss on Disposal of $10,000

c. credit to Gain on Disposal of $10,000

d. credit to Equipment for $70,000

21. ROK Corporation acquires a Copyright for $100,000 on January 1, 2019. The Copyright has a useful life of 20 years. Using the straight-line method, the required journal entry on December 31, 2019 would include a:

a. debit to Depreciation Expense-Copyright for $5,000

b. debit to Copyright for $5,000

c. debit to Amortization Expense-Copyright for $5,000

d. No entry is required on December 31, 2019

22. Research and Development costs are:

a. Recorded as an asset and depreciated over their useful lives.

b. Usually involve small amounts of money.

c. Recorded as an asset and NOT depreciated.

d. Expensed as incurred.

23. A current liability is a debt that can reasonably be expected to be paid:

a. within one year, or the operating cycle, whichever is longer.

b. between 6 months and 18 months.

c. out of currently recognized revenues.

d. out of cash currently on hand.

24. Moss County Bank agrees to lend the Sadowski Brick Company $200,000 on January 1. Sadowski Brick Company signs a $200,000, 6%, 9-month note. The entry made by Sadowski Brick Company on January 1 to record the proceeds and issuance of the note would include a:

a. debit to Interest Expense of $9,000.

b. credit to Notes Payable for $200,000.

c. credit to Notes Payable for $209,000.

d. credit to Interest Payable for $9,000.

25. A cash register tape shows cash sales of $3,000 and sales tax of $150. The journal entry to record this information is:

a. DR Cash 3,000; CR Sales $3,000

b. DR Cash $3,150; CR Sales Tax Revenue $150; CR Sales $3,000

c. DR Cash $3,000 DR Sales Tax Expense $150; CR Sales $3,150

d. DR Cash $3,150; CR Sales $3,000 CR Sales Tax Payable $150

26. On January 1, 2020, Ermler Company, a calendar-year company, issued $600,000 of notes payable, of which 150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2020, is:

a. Current Liabilities, $600,000.

b. Long-term Debt , $600,000.

c. Current Liabilities, $300,000; Long-term Debt, $300,000.

d. Current Liabilities, $150,000; Long-term Debt, $450,000.

27.

The following totals for the month of April were taken from the payroll register of Noll Company.

Salaries $24,000

FICA taxes withheld 1,100

Income taxes withheld 5,000

Medical insurance deductions 900

Federal unemployment taxes 64

State unemployment taxes 432

The journal entry to record the monthly payroll on April 30 would include a:

a. debit to Salaries Expense for $24,000.

b. credit to Salaries Payable for $24,000.

c. debit to Salaries Payable for $24,000.

d. debit to Salaries Expense for $17,000.

28. If the market rate of interest is greater than the contractual rate of interest, bonds will sell:

a. at a premium.

b. at face value.

c. at a discount.

d. at par value.

29. In the balance sheet, the account Discounts on Bonds Payable is:

a. added to bonds payable.

b. deducted from bonds payable.

c. classified as a stockholders' equity account.

d. classified as a revenue account.

30. Use the following information to answer the next 5 questions.

Gomez Corporation issues 500, 10-year, 8%, $1,000 bonds dated January 1, 2010.

Assuming the bonds are issued at face value, the journal entry to record the issuance will show a:

a. debit to Bond Interest Expense of $40,000

b. credit to cash of $500,000

c. debit to cash of $540,000

d. credit to Bonds Payable for $500,000

31. Assuming the bonds are issued at 96, the journal entry to record the issuance will show a:

a. debit to Cash of $500,000.

b. credit to Discount on Bonds Payable for $20,000.

c. credit to Bonds Payable for $480,000.

d. debit to Cash for $480,000.

32. Using the information in #31 above, after amortizing the bond discount, what is the TOTAL amount of interest expense that would be recorded in 2010?

a. $2,000

b. $38,000

c. $40,000

d. $42,000

33. Assuming the bonds are issued at 103. The journal entry to record the issuance will show a:

a. debit to Cash of $500,000.

b. debit to Premium on Bonds Payable for $15,000.

c. credit to Bonds Payable for $500,000.

d. credit to Cash for $515,000.

34. Using the information in #33 above, after amortizing the bond premium, what is the TOTAL amount of interest expense that would be recorded in 2010?

a. $1,500

b. $38,500

c. $40,000

d. $41,500

35. A $600,000 bond was retired at 98 when the carrying value of the bond was $592,000. The entry to record the retirement would include a:

a. gain on bond redemption of $8,000.

b. loss on bond redemption of $4,000.

c. loss on bond redemption of $8,000.

d. gain on bond redemption of $4,000.