QUESTION 6

Which of the following inventory costing methods yields the highest cost of goods sold when costs are rising during the accounting period?

		Specific-unit-cost
		Average-cost
		Last-In, First-Out
		First-In, First-Out

3 points

QUESTION 7

On November 20, 2012, Bath Auto Supply Corporation purchased stock in another company for $5,000 to hold as an available-for-sale investment. At December 31, the fair market value of the stock had risen to $5,240. What adjusting entry is needed at year-end to mark-to-market?

		Debit Cash, credit Gain on sale
		Debit Investments AFS, credit Unrealized holding gain
		Debit Fair value adjustment, credit Unrealized holding gain
		Debit Unrealized holding gain, credit Fair value adjustment

3 points

QUESTION 8

Which of the following is the proper accounting treatment for research and development costs?

		Research and development costs must be capitalized and amortized over 70 years or less.
		Research and development costs must be capitalized and amortized over 20 years or less.
		Research and development costs must be capitalized and expensed each year to the extent that their value has declined.
		Research and development costs must be expensed.

3 points

QUESTION 9

On March 2, 2012, Peterson Company bought 400 shares of Mine Supplies Corporation as a short term investment. Peterson paid $12 per share. On March 28, Peterson sold the shares at $9.50 per share. Which of the following entries would be booked by Peterson to record the sale?

		Debit Loss on sale $1,000, credit Investment $1,000
		Debit Investment $4,800, credit Cash $3,800, credit Loss on sale $1,000
		Debit Cash $3,800, credit Loss on sale $3,800
		Debit Cash $3,800, debit Loss on sale $1,000, credit Investment $4,800

3 points

QUESTION 10

The Allowance for uncollectible accounts currently has a debit balance of $200. The company's management estimates that 2.5% of net credit sales will be uncollectible. Net credit sales are $115,000. What will be the amount of Uncollectible accounts expense reported on the income statement?

		$2,675
		$2,875
		$3,275
		$3,075