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Computation of Amount of Depreciation

1. A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?

A. $395.
B. $410.
C. $450.
D. $510.
E. $520.

2. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

A. $ 200.
B. $1,564.
C. $1,568.
D. $1,600.
E. $1,800.

3. Beginning inventory plus net cost of purchases is:

A. Cost of goods sold.
B. Merchandise available for sale.
C. Ending inventory.
D. Sales.
E. Shown on the balance sheet.

4.On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?

A. $ 951.
B. $3,992.
C. $4,884.
D. $5,835.
E. $6,786.

5. On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:

A. A Above
B. B Above
C. C Above
D. D Above
E. E Above

6. A method that charges the same amount of expense over each period of the asset's useful life is called:

A. Accelerated depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.

7. A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

A. $1,275
B. $1,775
C. $4,500
D. $4,800
E $5,500

8.The entry necessary to establish a petty cash fund should include:

A. A debit to Cash and a credit to Petty Cash.
B. A debit to Cash and a credit to Cash Over and Short.
C. A debit to Petty Cash and a credit to Cash.
D. A debit to Petty Cash and a credit to Accounts Receivable.
E. A debit to Cash and a credit to Petty Cash Over and Short.

9. A company receives a 10%, 90-day note for $1,500. The total interest due on the maturity date is:

A. $ 50.00
B. $150.00.
C. $ 75.00.
D. $ 37.50.
E. $ 87.50.

10. A company uses the periodic inventory system and had the following activity during the current monthly period.

Using the weighted-average inventory method, the company's ending inventory would be reported at:

A. $2,000.
B. $2,200.
C. $2,250.
D. $2,400.
E. $4,400.

11.During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is:

A. Specific identification method.
B. Average cost method.
C. Weighted-average method.
D. FIFO method.
E. LIFO method.

12. The formula for computing annual straight-line depreciation is:

A. Depreciable cost divided by useful life in units.
B. Cost plus salvage value divided by the useful life in years.
C. Cost less salvage value divided by the useful life in years.
D. Cost divided by useful life in years.
E. Cost divided by useful life in units.

13. Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a:

A. Debit to Notes Receivable for $75,000.
B. Debit to Accounts Receivable for $75,000.
C. Credit to Notes Receivable for $75,000.
D. Debit Notes Payable for $75,000.
E. Credit to Sales for $75,000.

14. A company had the following purchases during the current year:

On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

A. $3,500.
B. $3,800.
C. $3,960.
D. $3,280.
E. $3,640.

15. A company purchased a cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?

A. $ 500.
B. $ 800.
C. $ 864.
D. $1,000.
E. $1,080.

16. Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is:

A. A Above.
B. B Above.
C. C Above.
D. D Above.
E. E Above.

17. A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold?

A. $120.
B. $124.
C. $128.
D. $130.
E. $140.

18. Outstanding checks refer to checks that have been:

A. Written, recorded, sent to payees, and received and paid by the bank.
B. Written and not yet recorded in the company books.
C. Held as blank checks.
D. Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.
E. Issued by the bank.

19 omitted

20.A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2007. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2007?

A. $1,000.
B. $1,333.
C. $1,533.
D. $4,000.
E. $4,600.

21. A company purchased a rope braiding machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year?

A. $25,200.
B. $26,160.
C. $26,660.
D. $27,613.
E. $53,160.

22. If a check correctly written and paid by the bank for $794 is incorrectly recorded on the company's books for $749, how should this error be treated on the bank reconciliation?

A. Subtract $45 from the bank's balance.
B. Add $45 to the bank's balance.
C. Subtract $45 from the book balance.
D. Add $45 to the book balance.
E. Subtract $45 from the bank's balance and add $45 to the book's balance.

23. A bank statement includes:

A. A list of outstanding checks.
B. A list of petty cash amounts.
C. The beginning and the ending balance of the depositor's checking account.
D. A listing of deposits in transit.
E. All of the above.

24. On October 1, Mutch Company sold merchandise in the amount of $5,800 to Carr Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Mutch uses the perpetual inventory system. On October 4, Carr returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Mutch must make on October 4 is:

A. A Above
B. B Above
C. C Above
D. D Above
E. E Above

25. A company uses the perpetual inventory system and recorded the following entry:

This entry reflects a:

A. Purchase.
B. Return.
C. Sale.
D. Payment of the account payable and recognition of a cash discount taken.
E. Purchase and recognition of a cash discount taken.

Solution Preview

1. A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?

A. $395.
B. $410.
C. $450.
D. $510.
E. $520.

Cost of 18 units

=6*25+10*22+2*20
=$410
Hence B

2. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

=Net purchases-cash discount
=(1800-200)*.98
=$1568
Hence C

A. $ 200.
B. $1,564.
C. $1,568.
D. $1,600.
E. $1,800.

3. Beginning inventory plus net cost of purchases is:

A. Cost of goods sold.
B. Merchandise available for sale.
C. Ending inventory.
D. Sales.
E. Shown on the balance sheet.

B. Merchandise available for sale.

4.On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?
=6%*97250-951
=$4884
Hence C is the answer

A. $ 951.
B. $3,992.
C. $4,884.
D. $5,835.
E. $6,786.

5. On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:

Here D is the answer

http://ccba.jsu.edu/accounting/PERPETUALPERIODICJE.HTML

6. A method that charges the same amount of expense over each period of the asset's useful life is called:

C. Straight line depreciation.

A. Accelerated depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.

7. A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the ...

Solution Summary

Response helps in finding amount of depreciation

$2.19