Reference no: EM132776513
Questions -
Q1. On January 1, 2019, Violet Co. purchased a vehicle costing $64,000. The vehicle has an estimated 5-year life and a $2,000 residual value. Violet uses the units-of-production depreciation method and Violet estimates that the vehicle will be driven 100,000 miles. What is the amount of accumulated depreciation reported on Violet's balance sheet at December 31, 2020, assuming the vehicle was driven 18,000 miles during 2019 and driven 9,000 miles during 2020?
16,740
17,280
24,800
5,580
Q2. Tomlinson Packaging Corporation began business in 2014 by issuing 20,000 shares of $6 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2014 balance sheet, Tomlinson Packaging would report
Paid-in Capital of $200,000.
Common Stock of $200,000.
Common Stock of $160,000.
Common Stock of $120,000.
Q3. Brown Inc. disposed of an asset at the end of the sixth year of its estimated life for $19,000 cash. The asset's life was originally estimated to be 8 years. The original cost was $40,000 with an estimated residual value of $8,000. The asset was being depreciated using the straight-line method. What was the gain (or loss) on the disposal?
Gain of 3,000
Loss of 9,000
Loss of 3,000
Gain of 9,000
Q4. ABC Company issued $600,000, 10%, 10-year bonds on January 1, 2010 when the market interest rate was 8%. Interest is paid annually. Determine the selling price of the bond.
305,705
600,000
680,519
277,914
Q5. Red Company has provided the following information:
200,000 shares of $5 par value common stock are authorized
160,000 shares have been issued
145,000 shares are outstanding
Which of the following statements is correct?
Red can issue an additional 55,000 shares of common stock.
Red can issue an additional 15,000 shares of common stock.
Red has 15,000 shares of treasury stock.
Red has 55,000 shares of treasury stock.
Q6. Grey Inc. purchased a machine on January 1, 2019, for $400,000. The machine has an estimated useful life of 8 years and a $20,000 residual value. Calculate the net book value of this machine on December 31, 2021 using the double declining-balance method of depreciation.
56,250
168,750
75,000
225,000
Q7. Pearl Inc. issued $800,000 of bonds with a 10% coupon rate of interest. When Pearl issued the bonds, the market rate of interest was 12%. Which of the following statements is correct?
Annual interest expense will exceed the company's actual cash payments for interest.
The bonds were issued at a premium.
Annual interest expense will be $80,000.
The book value of the bond will decrease as the bond matures.