31. Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000. Compute the cost that should be allocated to the land.

Multiple Choice

a. $93,000.

b. $140,000.

c. $32,500.

d. $31,000.

e. $97,500.

32. Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location. How many units should Sandoval include in its year-end inventory?

Multiple Choice

a. 29,000

b. 21,000

c. 23,000

d. 19,000

e. 26,000

33. A company factored $45,000 of its accounts receivable and was charged a 4% factoring fee. The journal entry to record this transaction would include a:

Multiple Choice

a. Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,800, and a credit to Accounts Receivable of $46,800.

b. Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000.

c. Debit to Cash of $43,200, a debit to Factoring Fee Expense of $1,800, and a credit to Accounts Receivable of $45,000.

d. Debit to Cash of $46,800 and a credit to Accounts Receivable of $46,800.

e. Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.

34. Organization expenses of a corporation often include legal fees and promoter fees. True or False?

35. Colvin Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be:

Multiple Choice

a. $36,000

b. $42,000

c. $54,000

d. $16,000

e. $90,000

36. Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Multiple Choice

a. Debit Merchandise Inventory $8,250; credit Cash $8,250.

b. Debit Cash $8,250; credit Accounts Payable $8,250.

c. Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50.

d. Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50.

e. Debit Accounts Payable $8,167.50; credit Cash $8,167.50.

37. If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded. True or False?

38. A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value. True or False?

39. Which of the following is not true regarding a credit card expense?

Multiple Choice

a. Credit card expense may be classified as a "discount" deducted from sales in the calculation of net sales.

b. Credit card expense may be classified as a selling expense.

c. Credit card expense may be classified as an administrative expense.

d. Credit card expense is not recorded by the seller.

e. Credit card expense is a fee the seller pays for services provided by the card company.

40. When using the allowance method of accounting for uncollectible accounts, the entry to record the estimated bad debts expense is a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts. True or False?

41. A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $500, was added to the invoice amount. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Multiple Choice

a. $9,224.

b. $10,200.

c. $10,500.

d. $10,300.

e. $9,424.

42. Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the units-of-production method.

Multiple Choice

a. $27,000.

b. $54,000.

c. $24,000.

d. $25,800.

e. $48,000.

43. When preparing the operating activities section of the statement of cash flows using the indirect method, depreciation is added to net income. True or False?

44. The allowance method of accounting for bad debts matches the estimated loss from uncollectible accounts receivable against the sales they helped produce. True or False?

45. When preparing the operating activities section of the statement of cash flows using the indirect method, decreases in current operating liabilities are subtracted from net income. True or False?

46. Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $13,162. Franklin's August bank statement shows $14,237 on deposit in the bank. Determine the adjusted cash balance using the following information:

Deposit in transit	$	4,500
Outstanding checks	$	3,900
Bank service fees, not yet recorded by company	$	50
The bank collected on a note receivable, not yet recorded by the company	$	1,725

The adjusted cash balance should be:

Multiple Choice

a. $18,737

b. $10,337

c. $14,887

d. $13,112

e. $14,837

47. The number of shares that a corporation's charter allows it to sell is referred to as:

Multiple Choice

a. Issued stock.

b. Outstanding stock.

c. Common stock.

d. Preferred stock.

e. Authorized stock.

48. Strods Company reported the following purchases and sales of its only product. Strods uses a periodic inventory system. Determine the cost assigned to the ending inventory using FIFO.

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	150 units @ $10.00
5	Purchase	220 units @ $12.00
10	Sales		140 units @ $20.00
15	Purchase	100 units @ $13.00
24	Sales		90 units @ $21.00

Multiple Choice

a. $2,980

b. $5,440

c. $2,460

d. $2,850

e. $2,590

49. Credit sales are recorded by increasing (crediting) Accounts Receivable. True or False?

50. FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans, job security, and reputation.

True or false?

51. Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit?

Multiple Choice

a. Debit Accounts Receivable $4,800; credit Sales $4,800.

b. Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800.

c. Debit Cash $4,800; credit Sales $4,800.

d. Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800.

e. Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800.

52. A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and credit Accounts Receivable $1,500. This means that a customer has taken what percentage cash discount for early payment?

Multiple Choice

a. 1%

b. 2%

c. 5%

d. 10%

e. 15%

53. Sales Discounts and Sales Returns and Allowances are subtracted in the calculation of net sales. True or false?

54. Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

Multiple Choice

a.

Accounts ReceivableA. Hopkins	2,000
Allowance for Doubtful Accounts		2,000

b.

Allowance for Doubtful Accounts	2,000
Bad debts expense		2,000

c.

Accounts ReceivableA. Hopkins	2,000
Bad debts expense		2,000
Cash	2,000
Accounts ReceivableA. Hopkins		2,000

d.

Allowance for Doubtful Accounts	2,000
Accounts ReceivableA. Hopkins		2,000

e.

Cash	2,000
Accounts ReceivableA. Hopkins		2,000

55. Which of the following is an accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected?

Multiple Choice

a. Allowance method of accounting for bad debts.

b. Aging of notes receivable.

c. Adjustment method for uncollectible debts.

d. Direct write-off method of accounting for bad debts.

e. Cash basis method of accounting for bad debts.