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

Johnson Co. uses the production method to depreciate its manufacturing equipment. The equipment cost $120,000 and has an estimated useful life of 100,000 machine hours, with a $10,000 residual value. What would be the depreciation expense for the current period if the machine was used for 800 machine hours?

		a. $960
		b. $920
		c. $1,040
		d. $880

On January 1, Sonar Corporation issued 20-year bonds payable with a face value of $1,000,000 and a payment (face) rate of 8%, with interest payments made semiannually. At the time the bonds were issued, the market interest rate for bonds of similar risk was 10%, compounded semiannually. Which table, rate, and number of periods would be used to find the present value of the semiannual interest payments?

		a. PV Single, 5%, 40 periods
		b. PV Annuity, 5%, 20 periods
		c. PV Annuity, 10%, 20 periods
		d. PV Annuity, 5%, 40 periods

The following Income Statement and account balance changes apply to this question:

Income Statement for the year:

Sales $1,400,000

Cost of Goods Sold 810,000

Gross Profit $590,000

Operating Expenses 360,000

Net Income before Taxes $230,000

Taxes 34,000

Net Income $196,000

Account Balance Changes during the year:

Accounts Payable increase $6,000

Prepaid expenses decrease $4,500

Taxes Payable increase $8,200

Accounts Receivable decrease $24,000

Additions to Accumulated Depreciation $76,000

Inventory increase $12,000

Accrued liabilities (e.g., Wages Payable) decrease $5,000

What was the amount of cash payments for operating expenses this year, using the direct method?

		a. $283,500
		b. $284,500
		c. $274,500
		d. $293,500