Solved by verified expert :Question 1
The following information pertains to Crane Video Company.
1.
Cash balance per bank, July 31, $7,893.
2.
July bank service charge not recorded by the depositor $35.
3.
Cash balance per books, July 31, $7,914.
4.
Deposits in transit, July 31, $1,815.
5.
Bank collected $1,215 note for Crane in July, plus interest $43,
less fee $27. The collection has not been recorded by Crane, and no interest
has been accrued.
6.
Outstanding checks, July 31, $598.
Prepare a bank reconciliation at July 31.(List items that increase cash balance first.)Journalize the adjusting entries at July 31 on the books of Crane
Video Company.(Credit account titles are automatically indented
when amount is entered. Do not indent manually.)Question 2
Information related to Mingenback Company for 2014 is summarized
below.
Total credit sales
$2,478,000
Accounts receivable at December 31
844,000
Bad debts written off
32,200
(a)
What amount of bad debt expense will Mingenback Company report
if it uses the direct write-off method of accounting for bad debts?
(b)
Assume that Mingenback Company estimates its bad debt expense to
be 3% of credit sales. What amount of bad debt expense will Mingenback
record if it has an Allowance for Doubtful Accounts credit balance of $4,400?
$
(c)
Assume that Mingenback Company estimates its bad debt expense
based on 5% of accounts receivable. What amount of bad debt expense will
Mingenback record if it has an Allowance for Doubtful Accounts credit balance
of $3,200? $
(d)
Assume that Mingenback Company estimates its bad debt expense
based on 5% of accounts receivable. What amount of bad debt expense will
Mingenback record if it has an Allowance for Doubtful Accounts debit balance
of $3,200? $
Question 3
On January 1, 2014, Evers Company purchased the following two
machines for use in its production process.
Machine A:
The cash price of this machine was $47,600. Related expenditures
included: sales tax $2,500, shipping costs $130, insurance during shipping
$80, installation and testing costs $60, and $130 of oil and lubricants
to be used with the machinery during its first year of operations. Evers
estimates that the useful life of the machine is 5 years with a
$5,700 salvage value remaining at the end of that time period. Assume
that the straight-line method of depreciation is used.
Machine B:
The recorded cost of this machine was $160,000. Evers estimates
that the useful life of the machine is 4 years with a
$8,900 salvage value remaining at the end of that time period.
Prepare the following for Machine A.(Round answers to 0 decimal places, e.g. $2,125. Credit account
titles are automatically indented when amount is entered. Do not indent
manually.)
1.
The journal entry to record its purchase on January 1, 2014.
2.
The journal entry to record annual depreciation at December 31,
2014.Calculate the amount of depreciation expense that Evers should
record for machine B each year of its useful life under the following
assumptions.(Round depreciation cost per unit to 2 decimal
places, e.g. 12.25. Round final answers to 0 decimal places, e.g. $2,125.)
(1)
Evers uses the straight-line method of depreciation.
(2)
Evers uses the declining-balance method. The rate used is twice
the straight-line rate.
(3)
Evers uses the units-of-activity method and estimates that the
useful life of the machine is 126,900 units. Actual usage is as follows:
2014, 48,700 units; 2015, 37,100 units; 2016, 23,500 units;
2017, 17,600 units.
Question 4
If a check correctly written and paid by the bank for $427 is
incorrectly recorded on the company’s books for $472, the appropriate treatment
on the bank reconciliation would be to
add $45 to the bank’s balance.
add $45 to the book’s balance.
deduct $427 from the book’s balance.
deduct $45 from the bank’s balance.
Warning
Question 5
Jukebox Company had checks outstanding totaling $10,800 on its
June bank reconciliation. In July, Jukebox Company issued checks totaling
$77,800. The July bank statement shows that $76,600 in checks cleared the bank
in July. A check from one of Jukebox Company’s customers in the amount of
$1,000 was also returned marked “NSF.” The amount of outstanding
checks on Jukebox Company’s July bank reconciliation should be
$11,000.
$1,200.
$12,000.
$13,000.
Question 6
Each of the following items affect the cash balance per books except
NSF checks.
outstanding checks.
bank service charges.
notes collected by the
bank.
Question 7
A customer charges a treadmill at Annie’s Sport Shop. The price
is $4,000 and the financing charge is 6% per annum if the bill is not paid in
30 days. The customer fails to pay the bill within 30 days and a finance
charge is added to the customer’s account.
What is the amount of the finance charge?
$240
$80
$8
$20
Warning
Question 8
A customer charges a treadmill at Annie’s Sport Shop. The price
is $4,000 and the financing charge is 9% per annum if the bill is not paid in
30 days. The customer fails to pay the bill within 30 days and a finance
charge is added to the customer’s account.
The accounts affected by the journal entry made by Annie’s Sport Shop to
record the finance charge are
Accounts Receivable
Interest Revenue
Accounts Receivable
Cash
Cash
Finance Receivable
Accounts Receivable
Interest Payable
Warning
Question 9
Syfy Company on July 15 sells merchandise on account to Eureka
Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise
worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co.
for the balance due. What is the amount of cash received?
$3,000
$5,000
$2,940
$2,900
Question
10
An aging of a company’s
accounts receivable indicates that $5,000 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $900 credit
balance, the adjustment to record bad debts for the period will require a
debit to Allowance
for Doubtful Accounts for $4,100.
debit to Bad Debt
Expense for $4,100.
credit to Allowance
for Doubtful Accounts for $5,000.
debit to Bad Debt Expense for $5,000.
Question
11
The cost of a
purchased building includes all of the following except
closing costs.
real estate
broker’s commission.
remodeling costs.
all
of these are included.
Question
12
A company purchased
land for $90,000 cash. Real estate brokers’ commission was $5,000 and
$7,000 was spent for demolishing an old building on the land before
construction of a new building could start. Under the historical cost
principle, the cost of land would be recorded at
$102,000.
$107,000.
$90,000.
Warning
Question
13
Hull Company
acquires land for $86,000 cash. Additional costs are as follows:
Removal of shed
$
300
Filling and grading
1,500
Salvage value of
lumber of shed
120
Broker commission
1,130
Paving of parking
lot
10,000
Closing costs
560
Hull will record
the acquisition cost of the land as
$89,610.
$89,370.
$96,000.
$87,690.
Warning
Question
14
All of the
following factors in computing depreciation are estimates except
residual value.
salvage value.
useful life.
cost.
Warning
Question
15
Angie’s Blooms
purchased a delivery van for $40,000. The company was given a $4,000
cash discount by the dealer, and paid $2,000 sales tax. Annual
insurance on the van is $1,000. As a result of the purchase, by how
much will Angie’s Blooms increase its van account?
$38,000
$36,000
$40,000
$39,000
