Multiple Choice Identify the letter of the choice that best completes the statement or answers the question Assume 360 days in a year when calculating INTEREST 26 The maturity value of an interest bearing note payable is the a face value plus the interest b face value minus the interest c interest d face value 27 Which of the following below is an example of a capital expenditure a cleaning the carpet in the front room b tune up for a company truck c replacing an engine in a company car d replacing all burned out light bulbs in the factory 28 Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight line method for 5 years At the beginning of year 6, it was determined that the useful life, due to obsolescence, should be shortened by 5 years and the residual value changed to zero The depreciation expense for the current year (year 6) and future years is a $5,500 b $11,000 c $10,000 d $5,000 29 A fixed asset with a cost of $42,000 and accumulated depreciation of $38,500 is traded for a similar asset priced at $60,000 Assuming a trade in allowance of $5,000, the cost basis of the new asset is ( assume the exchange lacks Commercial Substance ) a $58,000 b $58,500 c $60,000 d $61,500 30 Which of the following are included in the employer's payroll taxes a SUTA taxes b FUTA taxes c FICA taxes d all of the above 31 A fixed asset with a cost of $40,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000 Assuming a trade in allowance of $3,000, the recognized loss on the trade is a $1,000 b $3,500 c $ 500 d $1,500 32 The maturity value of a $40,000, 90 day, 6 note payable is a $40,600 b $42,400 c $600 d $2,400 33 When a company exchanges machinery and receives a trade in allowance greater than the book value, this transaction would be recorded with the following entry ( assume the exchange lacks Commercial Substance ) a debit Machinery and Accumulated Depreciation credit Machinery, Cash, and Gain on Disposal b debit Machinery and Accumulated Depreciation credit Machinery and Cash c debit Cash and Machinery credit Accumulated Depreciation d debit Cash and Machinery credit Accumulated Depreciation and Machinery 34 On June 8, Acme Co issued an $80,000, 6 , 120 day note payable to Still Co ( assume that the fiscal year of Acme Co ends June 30 ) What is the amount of interest expense recognized by Acme in the current fiscal year a $293 33 b $400 00 c $391 11 d $1,600 00 35 The cost of a product warranty should be included as an expense in the a period the cash is collected for a product sold on account b future period when the cost of repairing the product is paid c period of the sale of the product d future period when the product is repaired or replaced

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Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. Assume 360 days in a year when calculating

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question. Assume 360 days in a year when calculating INTEREST!!

____ 26. The maturity value of an interest-bearing note payable is the

a.	face value plus the interest
b.	face value minus the interest
c.	interest
d.	face value

____ 27. Which of the following below is an example of a capital expenditure?

a.	cleaning the carpet in the front room
b.	tune-up for a company truck
c.	replacing an engine in a company car
d.	replacing all burned-out light bulbs in the factory

____ 28. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight-line method for 5 years. At the beginning of year 6, it was determined that the useful life, due to obsolescence, should be shortened by 5 years and the residual value changed to zero. The depreciation expense for the current year (year 6) and future years is

a.	$5,500
b.	$11,000
c.	$10,000
d.	$5,000

____ 29. A fixed asset with a cost of $42,000 and accumulated depreciation of $38,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is (assume the exchange lacks Commercial Substance):

a.	$58,000
b.	$58,500
c.	$60,000
d.	$61,500

____ 30. Which of the following are included in the employer's payroll taxes?

a.	SUTA taxes
b.	FUTA taxes
c.	FICA taxes
d.	all of the above

____ 31. A fixed asset with a cost of $40,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is

a.	$1,000
b.	$3,500
c.	$ 500
d.	$1,500

____ 32. The maturity value of a $40,000, 90-day, 6% note payable is

a.	$40,600
b.	$42,400
c.	$600
d.	$2,400

____ 33. When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry (assume the exchange lacks Commercial Substance):

a.	debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal
b.	debit Machinery and Accumulated Depreciation; credit Machinery and Cash
c.	debit Cash and Machinery; credit Accumulated Depreciation
d.	debit Cash and Machinery; credit Accumulated Depreciation and Machinery

____ 34. On June 8, Acme Co. issued an $80,000, 6%, 120-day note payable to Still Co. (assume that the fiscal year of Acme Co. ends June 30). What is the amount of interest expense recognized by Acme in the current fiscal year?

a.	$293.33
b.	$400.00
c.	$391.11
d.	$1,600.00

____ 35. The cost of a product warranty should be included as an expense in the

a.	period the cash is collected for a product sold on account
b.	future period when the cost of repairing the product is paid
c.	period of the sale of the product
d.	future period when the product is repaired or replaced