Quiz: Quiz III: Ch. 7-9Page 1 of 7Quiz III: Ch. 7-9Started: Oct 28 at 9:18pmQuiz InstructionsQuestion 14 ptsThe Lowery C...

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The Lowery Co. uses the direct write-off method

April 14, 2018

Quiz: Quiz III: Ch. 7-9

Page 1 of 7

Quiz III: Ch. 7-9
Started: Oct 28 at 9:18pm

Quiz Instructions

Question 1

4 pts

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance
has been determined to likely be uncollecttible. The entry to write off this account would be which of the following?:

debit Bad Debt Expense; credit Accounts Receivable
debit Sales Returns and Allowance, credit Accounts Receivable
debit Bad Debt Expense; credit Allowance for Doubtful Accounts
debit Allowance for Doubtful Accounts; credit Accounts Receivable

Question 2

4 pts

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $460,000 and Allowance for Doubtful Accounts has
a balance of $30,000. What is the net realizable value of the accounts receivable?

$30,000
$460,000
$430,000
$490,000

Question 3

4 pts

What is the type of account and normal balance of Allowance for Doubtful Accounts?

Asset, debit
Contra asset, debit
Contra asset, credit
Asset, credit

Question 4

4 pts

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging
of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the
Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

Bad Debt Expense
15,000
Allowance for Doubtful Accounts

15,000

Bad Debt Expense
17,000
Allowance for Doubtful Accounts

17,000

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Quiz: Quiz III: Ch. 7-9

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Bad Debt Expense
20,000
Allowance for Doubtful Accounts

20,000

Bad Debt Expense
13,000
Allowance for Doubtful Accounts

13,000

Question 5

4 pts

An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $2,000. If Allowance for Doubtful Accounts has a $200 credit
balance, the adjustment to record the bad debt expense for the period will require a

credit to Allowance for Doubtful Accounts for $3,000.
debit to Bad Debt Expense for $1,800.
debit to Bad Debt Expense for $2,000.
debit to Bad Debt Expense for $2,200.

Question 6

4 pts

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit
sales. If net credit sales are $600,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

$24,000
cannot be determined
$24,500
$23,500

Question 7

4 pts

A 60-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

$9,800
$10,200
$10,000
$11,200

Question 8

4 pts

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120
debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Receivable, $120
debit Cash, $6,120; credit Notes Receivable, $6,120

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Quiz: Quiz III: Ch. 7-9

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Question 9

4 pts

Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper
Company make upon receiving the note?

Notes Receivable
Accounts Receivable—Dame Company

6,090
6,090

Notes Receivable
6,090
Accounts Receivable—Dame Company
Interest Revenue

6,000
90

Notes Receivable
Accounts Receivable—Dame Company

6,000
6,000

Notes Receivable
Interest Revenue
Accounts Receivable—Dame Company
Interest Receivable

6,000
90
6,000
90

Question 10

4 pts

Which of the following should be included in the acquisition cost of a piece of equipment?

installation costs
all are correct
testing costs prior to placing the equipment into production
transportation costs

Question 11

4 pts

Which of the following is included in the cost of constructing a building?

insurance costs during construction
cost of removing the demolished building existing on the land when it was purchased
cost of paving parking lot
cost of repairing vandalism damage during construction

Question 12

4 pts

A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would
have a cost basis of

$102,000
$ 99,000
$107,000
$109,000

Question 13

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4 pts

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Quiz: Quiz III: Ch. 7-9

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Which of the following below is an example of a capital expenditure?

tune-up for a company truck
replacing an engine in a company car
cleaning the carpet in the front room
replacing all burned-out light bulbs in the factory

Question 14

4 pts

A machine with a cost of $80,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-ofproduction method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

$26,667
$15,000
$5,000
$25,000

Question 15

4 pts

Equipment with a cost of $130,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the
straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

$32,500
$33,000
$24,000
$35,750

Question 16

4 pts

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for
the second full year, using the double declining-balance method?

$16,667
$18,750
$17,500
$37,500

Question 17

4 pts

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of
$185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the
amount of the gain or loss on this transaction?

Gain of $55,000

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No gain or loss
Gain of $25,000
Cannot be determined

Question 18

4 pts

Which intangible assets are amortized over their useful life?

all of the above
patents
goodwill
trademarks

Question 19

4 pts

The exclusive right to use a certain name or symbol is called a

franchise
trademark
copyright
patent

Question 20

4 pts

Which one of the following below is not an element of internal control?

information and communication
monitoring
behavior analysis
risk assessment

Question 21

4 pts

When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

separating responsibilities for related operations
monitoring
proofs and security measures
risk assessment

Question 22

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4 pts

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Quiz: Quiz III: Ch. 7-9

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A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be included on the bank reconciliation as a(n)

deduction to the balance per bank statement
addition to the balance per bank statement
addition to the balance per company's records
deduction to the balance per company's records

Question 23

4 pts

Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?

debit Miscellaneous Administrative Expense; credit Cash
debit Cash; credit Other Income
debit Accounts Payable; credit Cash
debit Cash; credit Accounts Payable

Question 24

4 pts

The amount of the outstanding checks is included on the bank reconciliation as a(n)

addition to the balance per company's records
deduction from the balance per bank statement
addition to the balance per bank statement
deduction from the balance per company's records

Question 25

4 pts

Meredith Company gathered the following reconciling information in preparing its May bank reconciliation:

Cash balance per books, 5/31

$2,500

Deposits in transit

150

Notes receivable and interest collected by bank

650

Bank charge for check printing
Outstanding checks
NSF check

40
1,800
140

The adjusted cash balance per books on May 31 is

$3,120
$1,320
$5,280
$2,970

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