Reference no: EM132614448

Questions -

QUESTION 1 - Entity C uses the allowance method for uncollectible accounts. Its ledger at the end of the current year shows Accounts Receivable of $300,000. Bad debts are expected to be 5% of Accounts Receivable. Allowance for Doubtful Accounts has a debit balance of $1,500 in the trial balance. What is the amount of bad debt expense for the current year?

1. $16,500

2. $13,500

3. $300,000

4. $15,000

QUESTION 2 - Entity I incurred various costs regarding its delivery truck which it purchased two years ago. For the cost that follows, indicate the proper treatment of the cost for financial accounting purposes: Annual license fees for the truck in 2021 were $200.

1. Capitalized

2. Expensed

3. Ignored.

QUESTION 3 - On October 1, 2020 (not January 1) Entity G purchased a refrigerated delivery truck for $100,000. The useful life was expected to be 5 years, with an expected salvage value of $20,000. Entity G uses straight-line depreciation. What is the amount of depreciation expense on the truck for 2020 (as of December 31, 2020). Round to the nearest dollar if necessary.

1. $16,000

2. $0

3. $20,000

4. $4,000

QUESTION 4 - Entity K is authorized to issue 1,000,000 shares of $1 par value common stock. On January 15, Entity K issued 700,000 shares of stock at $7 per share. On September 5, it repurchased 20,000 shares of common stock for the treasury at $8 per share. On December 6, it declared a dividend of .50 per share on outstanding shares. What is the amount of the dividend declared?

1. $340,000

2. $700,000

3. $20,000

4. $350,000

QUESTION 5 - Which one of the following is not a principle of sound accounts receivable management?

1. Monitor collections.

2. Determine a payment period.

3. Determine to whom to extend credit by obtaining a credit report.

4. Delay cash receipts from receivables if necessary.

QUESTION 6 - Entity F lent its customer $15,000 on September 1, 2022 accepting a 6-month, 10% interest-bearing note, with principal and interest payable at maturity. What is the maturity value of the note?

1. $16,500

2. $15,750

3. $15,000

4. $14,250

QUESTION 7 - Entity K is authorized to issue 1,000,000 shares of $1 par value common stock. On January 15, Entity K issued 700,000 shares of stock at $7 per share. On September 5, it repurchased 20,000 shares of common stock for the treasury at $8 per share. The journal entry to record the September 5, treasury stock transactionincludes:

1. a debit to Common Stock for $20,000

2. a debit to Treasury Stock for $160,000

3. a debit to Paid-In Capital in Excess of Par, Common Stock for $60,000

4. a debit to Long-Term Investments for $160,000

QUESTION 8 - When a company collects payment from a customer after it has written her account receivable off as uncollectible, which of the following statements is true?

1. the company should reverse the journal entry making the write off so as reinstate the customer's account

2. the company should journalize the cash collection from the customer

3. the company should reverse the journal entry making the write off so as to reinstate the customer's account and journalize the cash collection from the customer.

4. the company should just debit Cash and credit Allowance for Doubtful Accounts to save time.

QUESTION 9 - Entity L reported net income of $125,000 for the current year and uses the indirect method to report operating activities cash flow. Entity L reported a loss on sale of used equipment of $40,000. Choose the appropriate category on the statement of cash flows to report the loss.

1. Cash Flows From Operating Activities-Add to Net Income

2. Cash Flows From Operating Activities-Deduct from Net Income

3. Cash Flows From Investing Activities

4. Cash Flows From Financing Activities

5. Non-cash

QUESTION 10 - On January 1, 2021, Entity J issued $2,000,000 of 4% bonds with a five-year term. Interest is payable annually on January 1. The market interest rate was 6%. The issue price was $1,831,509. Entity J uses the effective interest method for amortization of bond discount or premium. What is the new carrying value of the bonds after the first interest accrual on December 31?

1. $1,831,509

2. $2,000,000

3. $3,000,000

4. $1,861,400