Reference no: EM13576938

1. Stine Company purchased machinery with a list price of $64,000. They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20,000. If Stine uses straight-line depreciation, annual depreciation will be

$4,100.

$6,100.

$4,072.

$3,760.

2. On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

$23,040.

$48,000.

$28,800.

$38,400.

3. Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2015?

$381,600

$418,400

$400,000

$420,700

4. S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000 by issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

Legal Expense 14,400 Common Stock 8,000 Paid-in Capital in Excess of Par - Common 6,400

Legal Expense 15,000 Common Stock 15,000

Legal Expense 15,000 Common Stock 8,000 Paid-in Capital in Excess of Par - Common 7,000

Legal Expense 14,400 Common Stock 14,400

5.Jahnke Corporation issued 8,000 shares of €2 par value ordinary shares for €11 per share. The journal entry to record the sale will include

a credit to Share Premium-Ordinary for €72,000.

a credit to Share Capital-Ordinary for €88,000.

a debit to Retained Earnings for €72,000.

a debit to Cash for €16,000.

6. Colie Company had an increase in inventory of $120,000. The cost of goods sold was $490,000. There was a $30,000 decrease in accounts payable from the prior period. Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?

$310,000.

$370,000.

$640,000.

$580,000.

7. Each of the following items may be classified as operating or financing activities under IFRS except

dividends paid.

interest paid.

dividends received.

all of these answer choices may be classified as such.

8. Brevard Corporation purchased a taxicab on January 1, 2013 for $25,500 to use for its shuttle business. The cab is expected to have a five-year useful life and no salvage value. During 2014, it retouched the cab's paint at a cost of $1,200, replaced the transmission for $3,000 (which extended its life by an additional 2 years), and tuned-up the motor for $150. If Brevard Corporation uses straight-line depreciation, what annual depreciation will Brevard report for 2014?

$5,100.

$4,100.

$3,900.

$4,125.

9. On July 1, 2014, Fleming Company sells machinery for $120,000. The machinery originally cost $300,000, had an estimated 5-year life and an expected salvage value of $50,000. The Accumulated Depreciation account had a balance of $175,000 on January 1, 2014, using the straight-line method. The gain or loss on disposal is

$5,000 gain.

$10,000 loss.

$20,000 gain.

$5,000 loss.