Question
32. Burke Company sold 5,000 widgets this month. The widgets have a warranty for free replacement. In the past, an average of 10% of widgets
32.
Burke Company sold 5,000 widgets this month. The widgets have a warranty for free replacement. In the past, an average of 10% of widgets sold were eventually replaced under the warranty. The cost of producing a widget is $25. This month, 420 widgets were actually replaced under the warranty. The journal entry for the 420 units replaced under warranty in the current month would be:
a. debit Inventory, $10,500; credit Estimated Warranty Liability, $10,500 | ||
b. debit Estimated Warranty Liability, $10,500; credit Inventory, $10,500 | ||
c. debit Inventory, $10,500; credit Warranty Expense, $10,500 | ||
d. debit Warranty Expense, $10,500; credit Inventory, $10,500 |
37.
The proper way to account for the cost of adding a new wing to a building would be to debit
a. the building's Accumulated Depreciation account. | ||
b. the Building account. | ||
c. the Repairs Expense account. | ||
d. none of the above. |
39.
Question 39
A truck was purchased for $25,000. It had a five-year life and a $4,000 residual value. Under the straight-line method, depreciation expense each year is
a. $4,000 | ||
b. $5,000 | ||
c. $4,200 | ||
d. $2,000 |
50.
A debit balance in Allowance for Uncollectible Accounts indicates that
a. the actual amount of uncollectible accounts was less than the company estimated they would be | ||
b. the company uses the percent of credit sales method to allow for uncollectible accounts | ||
c. the actual amount of uncollectible accounts was more than the company estimated they would be |
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