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Quiz: Quiz III: Ch. 7-9 Page 1 of 7 Quiz III: Ch. 7-9 Started: Oct 28 at 9:18pm Quiz Instructions Question 1 4 pts The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollecttible. The entry to write off this account would be which of the following?: debit Bad Debt Expense; credit Accounts Receivable debit Sales Returns and Allowance, credit Accounts Receivable debit Bad Debt Expense; credit Allowance for Doubtful Accounts debit Allowance for Doubtful Accounts; credit Accounts Receivable Question 2 4 pts After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $460,000 and Allowance for Doubtful Accounts has a balance of $30,000. What is the net realizable value of the accounts receivable? $30,000 $460,000 $430,000 $490,000 Question 3 4 pts What is the type of account and normal balance of Allowance for Doubtful Accounts? Asset, debit Contra asset, debit Contra asset, credit Asset, credit Question 4 4 pts Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? Bad Debt Expense 15,000 Allowance for Doubtful Accounts 15,000 Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 2 of 7 Bad Debt Expense 20,000 Allowance for Doubtful Accounts 20,000 Bad Debt Expense 13,000 Allowance for Doubtful Accounts 13,000 Question 5 4 pts An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $2,000. If Allowance for Doubtful Accounts has a $200 credit balance, the adjustment to record the bad debt expense for the period will require a credit to Allowance for Doubtful Accounts for $3,000. debit to Bad Debt Expense for $1,800. debit to Bad Debt Expense for $2,000. debit to Bad Debt Expense for $2,200. Question 6 4 pts Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $600,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is $24,000 cannot be determined $24,500 $23,500 Question 7 4 pts A 60-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is $9,800 $10,200 $10,000 $11,200 Question 8 4 pts A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120 debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Receivable, $120 debit Cash, $6,120; credit Notes Receivable, $6,120 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 3 of 7 Question 9 4 pts Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note? Notes Receivable Accounts ReceivableDame Company 6,090 6,090 Notes Receivable 6,090 Accounts ReceivableDame Company Interest Revenue 6,000 90 Notes Receivable Accounts ReceivableDame Company 6,000 6,000 Notes Receivable Interest Revenue Accounts ReceivableDame Company Interest Receivable 6,000 90 6,000 90 Question 10 4 pts Which of the following should be included in the acquisition cost of a piece of equipment? installation costs all are correct testing costs prior to placing the equipment into production transportation costs Question 11 4 pts Which of the following is included in the cost of constructing a building? insurance costs during construction cost of removing the demolished building existing on the land when it was purchased cost of paving parking lot cost of repairing vandalism damage during construction Question 12 4 pts A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of $102,000 $ 99,000 $107,000 $109,000 Question 13 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 4 pts 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 4 of 7 Which of the following below is an example of a capital expenditure? tune-up for a company truck replacing an engine in a company car cleaning the carpet in the front room replacing all burned-out light bulbs in the factory Question 14 4 pts A machine with a cost of $80,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-ofproduction method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? $26,667 $15,000 $5,000 $25,000 Question 15 4 pts Equipment with a cost of $130,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? $32,500 $33,000 $24,000 $35,750 Question 16 4 pts A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method? $16,667 $18,750 $17,500 $37,500 Question 17 4 pts On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction? Gain of $55,000 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 5 of 7 No gain or loss Gain of $25,000 Cannot be determined Question 18 4 pts Which intangible assets are amortized over their useful life? all of the above patents goodwill trademarks Question 19 4 pts The exclusive right to use a certain name or symbol is called a franchise trademark copyright patent Question 20 4 pts Which one of the following below is not an element of internal control? information and communication monitoring behavior analysis risk assessment Question 21 4 pts When a firm uses internal auditors, it is adhering to which one of the following internal control elements? separating responsibilities for related operations monitoring proofs and security measures risk assessment Question 22 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 4 pts 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 6 of 7 A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be included on the bank reconciliation as a(n) deduction to the balance per bank statement addition to the balance per bank statement addition to the balance per company's records deduction to the balance per company's records Question 23 4 pts Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts? debit Miscellaneous Administrative Expense; credit Cash debit Cash; credit Other Income debit Accounts Payable; credit Cash debit Cash; credit Accounts Payable Question 24 4 pts The amount of the outstanding checks is included on the bank reconciliation as a(n) addition to the balance per company's records deduction from the balance per bank statement addition to the balance per bank statement deduction from the balance per company's records Question 25 4 pts Meredith Company gathered the following reconciling information in preparing its May bank reconciliation: Cash balance per books, 5/31 $2,500 Deposits in transit 150 Notes receivable and interest collected by bank 650 Bank charge for check printing Outstanding checks NSF check 40 1,800 140 The adjusted cash balance per books on May 31 is $3,120 $1,320 $5,280 $2,970 https:/msu.instructure.com/courses/885327/quizzes/1010469/take 10/28/2014 Quiz: Quiz III: Ch. 7-9 Page 7 of 7 Quiz saved at 9:41pm https:/msu.instructure.com/courses/885327/quizzes/1010469/take 10/28/2014