Es Ne MULTIPLE CHOICE Choose the ene alternative that best cempletes the statement or answers the question 1DA machine originally had an estimaed usefel life of 7 years, but afher 4 complete years t was decided that the onginal estimmale that point the remaining cost to be depreciated should be allocated over the remaining A) 7 years. B) 12 years C)9 years f useful life shbould have been 12 years. A D) 8 years. E)3 years. 2Y 2) Rent expense appears on which of the following statements? A) Statement of retained camings. B) Statement of periodic expenses. C) Statement of cash flows only D) Balance sheet. E) Income statement 3) Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are A) Total assets, total liabilities, and total equity are unchanged. B) Both total assets and total liabilities decrease. C) Both total assets and cquity are unchanged and liabilities increase. D) Total assets decrease and equity increases E) Total assets increase and equity decreases. 31 4) When originally purchased, a vehicle costing $23.940 had an estimated useful life of 8 years and an estimated salvage value of $2100. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals: A) $5628.00 B) $2898.00. C) $2730.00. D) $10,920.00 E) $5460.00. 4Y 1 5) Peavey Enterprises purchased a depreciable asset for $30,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $3600, what will be the amount of accumulated depreciation on this asset on December 31, Year 3? A) $22,000 B) $6600 C) $5500 D) $18,150 E) $26,400 5) 6) A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of stockholders' equity? A) $88,000. B) $17,000. C) $29,000. D) $105,000. E) $71,000. 6) 7) Merchant Company purchased property for a building site. The costs associated with the property were: 7) Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to remove old building 187,000 16,200 2000 S 3200 2200 What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building? A) $210,600 to Land; $0 to Building. B) $189,000 to Land; $23,600 to Building. C) $205,200 to Land; $2200 to Building. D) $208,400 to Land; $0 to Building. E) $203,200 to Land; $7400 to Building. 8) A company purchased property for $100,000. The property included a building, parking lot, and land. The building was the parking lot at $18,900. Land should be recorded in the accounting records with an allocated cost of: A) $38,880. B) $0. C) $48,600. D) $100,000 E) $44,880. 8) appraised at $57,500; the land at $48,600, and a 2 9) A company had a tractor destroyed by fire. The tractor originally cost $130,000 with accumulated depreciation of $64,500. The proceeds from the insurance company were $25,000. The company should recognize 9) A) A loss of $40,500. B) A gain of $40,500. C) A gain of $25,000. D) A loss of $65,500. E) A gain of $65,500. 10) A company purchased equipment valued at S145,000. It traded in old equipment for a $61,000 trade-in allowance and the company paid S84,000 cash with the trade-in. The old equipment cost $130,000 and had accumulated depreciation of $78.000o. This transaction has commercial substance. What is the recorded value of the new equipment? A) $61,000 B) $136,000. C) $52,000. 10) D) $84,000. E) $145,000. 11) 11) On December 1, Victoria Company signed a 90-day, 7% note payable, with a face value of $8400. What amount of interest exnense is accrued at December 31 on the note? (Use 360 days a year.) A) $147 E) $49 D) $0 C) $588 B) $98 12) of $12,600. What is the maturity value of the note on March 1? (Use 360 days a year.) A) $12.768 B) $12,712 C) $12,936 D) $12,600 E) $12,824 12) On November 1, Alan Company signed a 120-day, 8% note payable, with a face value 13) On April 12, Hong Company agrees to accept a 60-day, 10 % , $5300 note from Indigo Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Indigo Company? A) Debit Sales $5300; credit Notes Payable $5300. B) Debit Notes Payable $5300; credit Accounts Payable $5300. C) Debit Accounts Payable $5300; credit Notes Payable $5300. D) Debit Accounts Receivable $5300; credit Notes Payable $5300. E) Debit Cash $5300; credit Notes Payable $5300. 14) On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? A) $52.000 B) $57,000. C)$32,000. D) $47,000 E) 55,000. 14) 15) Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearmed items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction? A) Debit Office supplies, $500; credit Accounts payable, $500. B) Debit Office supplies expense, $500; credit Cash, $500. C) Debit Office supplies, $500; credit Cash, $500. D) Debit Cash, $500; credit Office supplies, $500. E) Debit Accounts payable, $500; credit Office supplies, $500 15) 16) The following transactions occurred during July: 16) Received $900 cash for services provided to a customer during July Received $2,200 cash investment from Bob Johnson, the owner of the business. Received $750 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $375 Borrowed S6,000 from the bank by signing a promissory note. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July? A) S 11,100. B) $ 2,525. C) S 900. D) S 1,275. E)S 3,275 17) 17) Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is: A) Debit Office Supplies Expense $254 and credit Office Supplies $254 B) Debit Office Supplies Expense S105 and credit Office Supplies $105. C) Debit Office Supplies $254 and credit Office Supplies Expense $254. D) Debit Office Supplies $105 and credit Office Supplies Expense $105 E) Debit Office Supplies $105 and credit Supplies Expense $254. 4 I tecured but unpaid espenses that are recorded during the adjusting process with a. debit to an expense and a credit to a liability are A) Unearned expenses. B) Net expenses C) Intangible expenses. D) Accrued expenses. E) Prepaid expenses ran 18) Choose the ollowing 19) A company purchased $10.000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned S800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals A) $9,800 19) s reven ts recei B) $10,000. C) $8,924. D) $9,700. E) $8,724. follow rted on evenu revenu revens reven 20) On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Jepson uses the periodic inventory system and the gross method of accounting for purchases. The journal entry that Jepson will make on A) 20) September 12 is: reven Merchandise inventory 5.800 he ne Accounts payable 5.800 r the salar pens se B) Accounts payable Merchandise inventory 4,000 4,000 rev Purchases Accounts receivable 4.000 ,00 ,0 ,0 D. 4,000 D) Purchases Accounts receivable 5,800 5,800 E) Purchases Accounts payable 5,800 5,800 575 ers the 21) A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals: A) $1,600. 21) C) S1,564 B) $200. D) $1,800. E) $1,568. 22) Goods in transit are included in a purchaser's inventory: A) When the supplier is responsible for freight charges. B) When the purchaser is responsible for paying freight charges. C) After the half-way point between the buyer and seller D) At any time during transit. E) If the goods are shipped FOB destination. 22) 23) Buffalo Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available: 23) . The ending inventory balance of $412,000 did were purchased by Buffalo on December 28 and shipped FOB destination on that date. Buffalo did not receive the goods until January 2 of the following year. The ending inventory balance of $412,000 included damaged goods at their original cost of $38,000. The net realizable value of the damaged goods was $10,000. ing $48,000 that nclude goods co Based on this information, the correct balance for ending inventory on December 31 is: A) $422,000 B) $384,000 C) $460,000 D) $438,000 E) $374,000 24) A company had the following purchases and sales during its first year of operations: 24) Purchases Sales January February May: September: November: 10 units at $120 6 units 20 units at S125 5 units 15 units at $130 12 units at $135 10 units at $140 9 units 8 units 13 units On December 31, there were 26 units remaining in ending inventory. Using the Perpetual FIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) A) $3,540. C) $3,270. D) $3,405 E) $3,200. B) $3,365. 25) A company had the following purchases and sales during its first year of operations: 25) Purchases 10 units at $120 20 units at $125 15 units at $130 12 units at $135 January February: Sales 6 units y: September November: 5 units 9 units 8 units 13 units 10 units at $140 On December 31, there were 26 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) A) $5,400. E) $3,364. D) $3,405 C) S3,200. B) $3,270 TRUE/FALSE. Write T if the statement is true and 'F' if the statement is false. 26) in inventory regardless of whether title has 26) Goods in transit are automatic passed to the buyer. ud 27) 27) In a period of rising purchase costs, LIFO usually gives a lower taxable income and therefore, yields a tax advantage. 28) 28) 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. 29) 29) Goods on consignment are goods shipped by their owner, called the consignor, to another party called the consignee. The consignee sells goods for the owner. 30) 30) If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination. D