Final Exam 101 -- MyAccountingLab Test 2 Flashcards
Bay Back Company acquired equipment on July 1, 2011, for $210,000. The residual value is $35,000, and the estimated life is 5 years or 40,000 hours. Compute the balance in accumulated depreciation as of December 31, 2013, if Bay Back Company uses the double-declining-balance method of depreciation.
4 7.3
$149,520
What are accounted fro as long-term assets when purchased or developed, and their cost is transferred to expense through a process call depletion?
Natural Resources
Martson and Co. made the following journal entries:
Accounts Receivable 25,000
Sales Revenue 25,000
Cost of Goods Sold 10,000
Inventory 10,000
What is Martson’s gross profit from this sale?
$15,000
What is a true statement about sales?
Sales discounts are offered to customers in order to speed up cash flow
when inventory is shipped from the seller to the buyer with shipping terms of FOB destination
the goods will be included in the inventory of the seller until they reach their destination
Under the Allowance Method, the entry to write of a $2,600 uncollectible account includes a
Debit to Allowance for Uncollectible Accounts for $2,600
What is the proper order for assets on a balance sheet?
Cash Accounts Receivable Property Plant and Equipment Long-term Investment
Hawthorne Company sold office furniture for $2,500 cash. The furniture cost $30,000 and had accumulated deprecation through the date of sale totaling $29,000. the company will recognize
a gain of $1,500
An investor who owns 25% of the outstanding stock of another company should report the investment using the
equity method
A company has a beginning inventory of $40,000 and purchases during the year of $110,000. The beginning inventory consisted of 3,000 units and 7,000 units were purchased during the year. the average cost per unit is
$13.00
40,000 / 3000
the lower-of-cost-or-market rule is based on the accounting principle of
conservatism
On January 2, 2011, KJ Corporation acquired equipment for $260,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated value is $20,000. What is the book value of the asset on December 31, 2012, if KJ Corporation uses the straight-line method of depreciation?
$164,000
Patents are amortized over a period
of 20 years or the expected useful life, whichever is less
When goods are shipped FOB destination
revenue is recognized when the goods are received by the customer
Company A has a Note Receivable of $5000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is
$1,000 is a current asset and
$4,000 is a long-term asset
When inventory prices are increasing, the FIFO costing method will generally yield a cost of goods sold that is
lower than the cost of goods sold under the LIFO method
The journal entry to record the purchase of inventory on account under the periodic inventory system is
debit purchases and
credit accounts payable
Other comprehensive income
appears on the income statement in a separate section below net income
A separate account for each customer is kept in a(n)
subsidiary ledger
Carmel Corporation purchased 5% bonds for $42,000 on January 1, 2012. Only July 1, 2012, Carmel received cash interest of $1,050. The journal entry to record the purchase on January 1 would include a
Debit to Long-Term Investment in Bonds $42,000
What costs are included in inventory
insurance while in transit
freight-in
taxes paid on the purchase price
When a company receives a cash dividend from a trading security, the journal entry includes
a debit to cash and a credit to dividend revenue
Sales revenue is based on the ___ price of inventory, while the cost of goods sold is based on the ___ of the inventory.
Sales revenue is based on the SALES price of inventory, while the cost of goods sold is based on the COST of the inventory.
What is the correct order for items to appear on the income statement?
Sales Revenue
Cost of Goods Sold
Gross Profit
Net Income
The process of depreciating an asset over its useful life is an application of what principle?
Matching
On January 2, 2011, KJ Corporation acquired equipment for $260,000. the estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $20,000. If KJ Corporation uses the units of production method of depreciation, what will be the debit to Deprecation Expense for the year ended December 31, 2012, assuming that during this period, the asset was used 8,250 hours?
$49,500
On January 1, 2012, Plymouth Company purchases $100,000, 6% bonds at a price of 90.4 and a maturity date of January 1, 2016. Interest is paid semiannually, on January 1 and July 1. Plymouth Company has a calendar year end. The entry for the receipt of interest on July 1, 2012 would include a
credit to Interest Revenue $3,000
Pat’s Pets recently paid to have the engine in its delivery van overhauled. the estimated useful life of the van was originally estimated to be 4 years. the overhaul is expected toe extend the useful life of the van to 10 years. The overhaul is regarded as a(n)
capital expenditure
Toyland’s inventory records show the following data at January 31:
Beginning Inventory Jan 1 250 units at $8 per unit
Jan 10 purchase 300 units at $10 per unit
Jan 22 purchase 110 units at $11 per unit
At January 31, 2012 units are still on hand. What is the value of the ending inventory at January 31 if Toyland uses the FIFO method?
$2210
Boat Company signed a 12-month, $40,000, 8% note on June 1, 2012. The mount of inetrest to be accrued on December 31, 2012, is
$1867
The book value of an asset is defined as
Cost minus Accumulated Depreciation
Unrealized gains and losses from available-for-sale investments arise from
changes in the market value of the investment
What depreciation method best applies to those assets that generate greater revenue earlier in their useful lives?
Double-Declining Balance Method
Receiving a cash dividend from an available-for-sale investment requires what journal entry?
a debit to Cash and
a credit to dividend revenue
The following account balances were extracted fromteh accounting records of A and D Corporation:
Accounts Receivable $110,000
Allowance for Uncollectible Accounts $35,000
Uncollectible-Account Expense $60,000
What is the net realizable value of the accounts receivable?
$75,000
A year-end review of Accounts Receivable and estimated uncolletible percentages revealed the following:
1-30 days $60,000 1%
31-60 days $40,000 3%
61-90 days $20,000 10%
over 90 days $5,000 50%
The credit balance in Allowance for Uncollectibel Accounts was $1,000. Under the aging-of-receivables method, the uncollectibel-account expense for the year is
$5,300
ABC company sells goods to the XYZ Company for $1,000. It offers credit terms of 2/10, n/30. If XYZ Company pays the invoice within teh discount period, ABC Company will record a debit to cash in the amount of
$980
Using a perpetual inventory system, which of the following entries would record the cost of merchandise sold on credit?
Cost of Goods Sold
Inventory
the company whose more than 50% of the stock is owned by a parent company is called the
subsidiary company
If the single amount of $5,000 is to be received in 3 years and discounted at 6%, its present value is
$4,200
