Circle/Highlight (bold) the Correct Answer. Show calculations where requested. 1) Spects World purchased equipment costing $10,000. The equipment has a residual value of $1,000, and an estimated useful life of 5 years or 36,000 shoes. Actual units produced during the year were 7,000 units. Calculate annual depreciation using the units of production method. (Worth 3 of the 15 marks) (Show Calculations) a) $1,450 b) $4,000 c) $1,800 d) $2,000 e) $1,750 2) William and Smith formed a partnership with Scott. Scott contributed $100,000, William contributed $40,000, and Smith contributed $60,000 to the partnership Their partnership agreement called for the earnings to be divided based on the ratio of each partners' capital investment. If the partnership had a profit of $475,000 for its first year of operation, how much would be credited to Smith's capital account? (Worth 2 of the 15 marks) (Show Calculations) a) $166,250 b) $142,500 c) $130,000 d) $345,000 e) $475,000 3) Smith and Farley are forming a partnership. Smith will invest equipment with a fair market value of $55,000. Also, the partnership will assume responsibility for a $15,000 note owed for the equipment. Farley will invest $25,000 cash. On the books of the partnership, the amount to be recorded as a credit to Smith's capital account is? (Worth 1 of the 15 marks) a) $25,000 b) $65,000 c) $40,000 d) $55,000 e) $70,000 8) Just before Acupone Funeral Homes Inc. issued a 10% share dividend on December 1, the following data was collected: 4) A machine with a cost of $160,000 and accumulated depreciation of $85,000 was sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is2 (Worth 1 of the 15 marks) a) $75,000 b) $25,000 c) $50,000 d) $180,000 e) $85,000 Retained earnings Shares outstanding Market value per share Par value per share Shares issued $850,000 10,000 $10 $4 11,000 5) Dallas Sports Ltd has 100 shares of $15 cumulative preferred shares outstanding, and $160,000 of common shares outstanding. In the company's first year of operation, no dividends were paid, but during the second year Dallas Sports paid dividends of $24.000. The dividend should be distributed as follows: (Worth 2 of the 15 marks) (Show Calculations) a) $1,500 preferred: $22,500 common. b) $3.000 preferred: $21,000 common. c) $12,000 preferred: $12,000 common. d) $1.400 preferred: $12,800 common. e) $7.000 preferred: $7,000 common. The amount that total equity will increase or decrease as a result of recording the 10% share dividend is? (Worth 1 of the 15 marks) a) $7.500 b) $(9,000) c) $22,500 d) $(27,000) e) S-O- 9) DVDs usually sell for $24 per unit and have a profit margin of 25%. However, the expected selling price has fallen to $17 per unit. The Movie Company's current inventory includes 300 units purchased at $18 per unit. Calculate the value of the inventory at the lower of cost and net realizable value. (Worth 1 of the 15 marks) 6) A corporation ended its first year of operations with current assets of $200,000 and liabilities of $125.000. During the year the corporation issued 2.000 preferred shares at $12.00 per share and 5.000 common shares at $5.00 per share. What was the corporation's profit or loss for its first year of operation? (Worth 3 of the 15 marks) (Show Calculations) a) $75,000 b) $49,000 c) $28,000 d) $51,000 e) None of the above a) $5,400 b) $7.200 c) $5,100 d) $2,100 e) $3,825 7) Barb Inc. issued 500 common shares in payment of a $1,900 bill from its accountant for assistance in filing its charter. The entry to record this transaction will include: (Worth 1 of the 15 marks) a) A $1,900 credit to Common Shares b) A $1,900 debit to Common Shares c) A $1,900 credit to Legal Expense d) A $1,900 credit to Organization Expense