1) Which of the following subsequent expenditures would be capitalized?

A) Ordinary repair.

B) Costs that increase the service life of an asset.

C) Routine maintenance.

D) Ordinary repair and routine maintenance.

2) Bear Essentials borrowed $50,000 from Stacks Bank and signed a promissory note. What entry should Stacks Bank record?

A) Debit Cash, $50,000; Credit Notes Receivable, $50,000.

B) Debit Notes Receivable, $50,000; Credit Cash, $50,000.

C) Debit Cash, $50,000; Credit Notes Payable, $50,000.

D) Debit Notes Payable, $50,000; Credit Cash, $50,000.

3) During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck for $175,000. If the truck has an estimated life of 10 years or 300,000 miles, and an estimated residual value of $25,000, what amount of depreciation expense should Supplies, Inc. record in the second year using the activity-based method?

A) $11,000.

B) $18,500.

C) $7,500.

D) $16,000.

4) On November 1, 2021, a company signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2022. The company records the appropriate adjusting entry for the note on December 31, 2021. In recording the payment of the note plus accrued interest at maturity on May 1, 2022, the company would:

A) Debit Interest Expense, $2,000.

B) Debit Interest Expense, $1,000.

C) Debit Interest Payable, $2,000.

D) Debit Interest Expense, $3,000.

5) Aspen, Inc. developed a new horse transport device and incurred research and development costs of $250,000. Rather than continue with its own research, Aspen decided to purchase a patent for a similar design from Vail, Inc. for $350,000. What are the total assets and expenses for these developments?

A) Assets $600,000; Expenses $0.

B) Assets $250,000; Expenses $350,000.

C) Assets $350,000; Expenses $250,000.

D) Assets $0; Expenses $600,000.