On April 1, 20X1, a firm accepted a 10-month, 8 percent note for $3,000 from a customer with an overdue balance. The interest income on this note for the year ended June 30, 20X1, is

Multiple Choice

• $20.

• $24.

• $60.

• $240.

Which of the following statements is not correct?

Multiple Choice

• Uncollectible Accounts Expense is a contra asset account.

• The cost less the salvage value equals the depreciable base of a long-term asset.

• Each adjustment for an accrued expense includes a credit to a liability account.

• If a firm records prepaid expense items in an expense account when they pay for them, their adjustment at the end of the period to record the unexpired portion would include a debit to an asset account and a credit to an expense account.

On January 1, 20X1, a firm purchased machinery for $28,000. Depreciation expense for the year ending December 31, 20X, given the straight-line method, a 10-year useful life, and a salvage value of $3,000, is

Multiple Choice

• $1,250.

• $2,500.

• $2,800.

• $3,000.

Which of the following statements is correct?

Multiple Choice

• On the worksheet, the amount of the ending merchandise inventory is shown in the Income Statement Credit column in the account Income Summary and the Balance Sheet Debit column in the account Merchandise Inventory.

• On the worksheet, the totals of the Income Statement columns should equal the totals of the Balance Sheet columns.

• On the worksheet, if debits exceed credits in the Adjusted Trial Balance section, the difference represents a net loss.

• All of these statements are correct.