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A company used straight-line depreciation for an item of equipment that cost $12,450, had a salvage value of $2,200, and had a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,260 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life:

a)            $1,050.

b)            $1,680.

c)            $2,238.

d)            $1,547.

e)            $1,865.

 

The difference between the amount received from issuing a note payable and the amount repaid is referred to as:

a)            Interest.

b)            Cash.

c)            Principle.

d)            Accounts Payable.

e)            Face Value.

 

Sellers allow customers to use credit cards:

a)            To avoid having to evaluate a customer's credit standing for each sale.

b)            To lessen the risk of extending credit to customers who cannot pay.

c)            To speed up receipt of cash from the credit sale.

d)            To increase total sales volume.

e)            All of these.

 

A company had a bulldozer destroyed by fire. The bulldozer originally cost $141,000 with accumulated depreciation of $74,400. The proceeds from the insurance company were $98,000. The company should recognize:

a)            A gain of $31,400.

b)            A loss of $66,600.

c)            A gain of $66,600.

d)            A gain of $98,000.

e)            A loss of $31,400.

 

A company purchased a rope braiding machine for $206,520. The machine has a useful life of 8 years and a residual value of $11,000. It is estimated that the machine could produce 752,000 units of climbing rope over its useful life. In the first year, 106,000 units were produced. In the second year, production increased to 110,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year? (Do not round intermediate calculations.)

a)            $28,600.

b)            $29,111.

c)            $30,209.

d)            $56,160.

e)            $27,560.

 

A company factored $36,000 of its accounts receivable and was charged a 2% factoring fee. The journal entry to record this transaction would include a:

a)            Debit to Cash of $36,000 and a credit to Notes Payable of $36,000.

b)            Debit to Cash of $36,000 and a credit to Accounts Receivable of $36,000.

c)            Debit to Cash of $35,280, a debit to Factoring Fee Expense of $720, and a credit to Accounts Receivable of $36,000.

d)            Debit to Cash of $36,720 and a credit to Accounts Receivable of $36,720.

e)            Debit to Cash of $36,000, a credit to Factoring Fee Expense of $720, and credit to Accounts Receivable of $35,280.

 

A machine originally had an estimated useful life of 9 years, but after 2 complete years, it was decided that the original estimate of useful life should have been 12 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

a)            12 years.

b)            5 years.

c)            3 years.

d)            7 years.

e)            10 years.

 

A company sells computers at a selling price of $1,800 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all computers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 computers, and 400 computers were serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company's warranty expense for the month of November?

a)            $60,000

b)            $90,000

c)            $45,000

d)            $26,000

e)            $55,000

 

A company had average total assets of $975,000. Its gross sales were $1,116,000 and its net sales were $920,000. The company's total asset turnover equals (Round your final answer to two decimal places):

a)            0.87.

b)            1.09.

c)            0.94.

d)            1.06.

e)            1.21.

 

MixRecording Studios purchased $8,800 in electronic components from TechCom. MixRecording Studios signed a 45-day, 7% promissory note for $8,800. If the note is dishonored, what is the amount due on the MixRecording Studios? (Use 360 days a year. Do not round intermediate calculations.)

a)            $9,130

b)            $9,050

c)            $8,877

d)            $8,800

e)            $77

 

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