Question
A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial
A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:
Accounts receivable | $ | 348,000 | debit |
Allowance for uncollectible accounts | 670 | debit | |
Net Sales | 793,000 | credit | |
All sales are made on credit. Based on past experience, the company estimates 0.5% of net credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Multiple Choice
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Debit Bad Debts Expense $2,410; credit Allowance for Doubtful Accounts $2,410.
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Debit Bad Debts Expense $1,740; credit Allowance for Doubtful Accounts $1,740.
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Debit Bad Debts Expense $4,635; credit Allowance for Doubtful Accounts $4,635.
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Debit Bad Debts Expense $3,295; credit Allowance for Doubtful Accounts $3,295.
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Debit Bad Debts Expense $3,965; credit Allowance for Doubtful Accounts $3,965.
A company purchased a weaving machine for $248,170. The machine has a useful life of 8 years and a residual value of $13,500. It is estimated that the machine could produce 757,000 bolts of woven fabric over its useful life. In the first year, 108,500 bolts were produced. In the second year, production increased to 112,500 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?
Multiple Choice
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$34,875.
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$68,510.
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$36,881.
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$35,570.
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$33,635.
Martin Company purchases a machine at the beginning of the year at a cost of $74,000. The machine is depreciated using the straight-line method. The machines useful life is estimated to be 4 years with a $7,000 salvage value. Depreciation expense in year 4 is:
Multiple Choice
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$0.
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$67,000.
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$18,500.
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$16,750.
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$74,000.
Mohr Company purchases a machine at the beginning of the year at a cost of $35,000. The machine is depreciated using the units-of-production method. The company estimates it will use the machine for 5 years, during which time it anticipates producing 62,000 units. The machine is estimated to have a $4,000 salvage value. The company produces 10,100 units in year 1 and 7,100 units in year 2. Depreciation expense in year 2 is:
Multiple Choice
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$14,000.
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$6,200.
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$21,000.
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$3,550.
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$4,000.
A machine originally had an estimated useful life of 12 years, but after 2 complete years, it was decided that the original estimate of useful life should have been 15 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
Multiple Choice
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15 years.
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5 years.
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12 years.
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13 years.
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10 years.
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