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 Jewell Company has current assets of $56,000 - $17.29

Solution for the Following:

Value of Money

1. Which of the following would be considered a contingent liability?
A. Mortgage obligation
B. Accounts payable obligation
C. Pending legal action
D. Sales tax obligation

2. A repair that extends the useful life of an asset would be considered a/an
A. ordinary repair.
B. extraordinary repair.
C. betterment.
D. capital expense

3. Jewell Company has current assets of $56,000; long-term assets of $135,000; current liabilities of $44,000; and long-term liabilities of $90,000. Jewell Company's debt ratio is
A. 70.2%.
B. 127.3%.
C. 239.3%.
D. 78.6%.

4. A patent has amortization this year of $2,300. The journal entry would be
A. debit Amortization Expense—Patent, $2,300; credit Patent, $2,300.
B. debit Accumulated Amortization—Patent, $2,300; credit Amortization Expense—Patent, $2,300.
C. debit Accumulated Amortization—Patent, $2,300; credit Patent, $2,300.
D. debit Amortization Expense—Patent, $2,300; credit Accumulated Depreciation—Patent, $2,300.

5. Which of the following would be considered a cash equivalent?
A. Time deposits
B. Currency
C. Checks
D. Money orders

6. Use the _______ principle to estimate warranty liabilities.
A. entity
B. conservatism
C. objectivity
D. matching

7. Which of the following is not a benefit to extending credit to customers?
A. Increased revenues
B. Increased profits
C. Bad-debt expenses
D. Wider range of customers

8. Casey Company's bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50 and a bank collection of $760 in Casey Company's behalf. Casey's book balance should be adjusted by a total of
A. +$710.
B. –$710.
C. +$810.
D. +$760.

9. Tammy Industries inadvertently debited a $5,000 betterment as an ordinary expense. Which of the following will occur as a result of this mistake?
A. Net income will be overstated by $5,000.
B. The asset will be overstated by $5,000.
C. Retained earnings will be overstated by $5,000.
D. The asset will be understated by $5,000.

10. Using a 360-day year, the maturity value of a 69-day note for $1,500 at 7% annual interest is (rounded to the nearest cent)
A. $1,520.13.
B. $1,584,88.
C. $20.13.
D. $1,605.00.

11. A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $500. The journal entry to record this transaction is
A. debit Cash for $500, debit Loss on Disposal for $55,500, and credit Truck for $56,000.
B. debit Loss on Disposal $6,000, debit Accumulated Depreciation—Truck for $50,000, and credit Truck for $56,000.
C. debit Cash for $500, debit Truck for $50,000, debit Loss on Disposal for $5,500, and credit Accumulated Depreciation—Truck for $56,000.
D. debit Cash for $500, debit Accumulated Depreciation—Truck for $50,000, debit Loss on Disposal for $5,500, and credit Truck for $56,000.

12. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item B should be recorded is
A. ($55,000/$95,000) × $125,000.
B. ($55,000/$125,000) × $150,000.
C. ($55,000/$95,000) × $150,000.
D. ($55,000/$150,000) × $125,000.

13. If a $6,000, 10%, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue on December 31 if interest payments are made annually?
A. None
B. $104
C. $500
D. $150

14. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item C should be recorded (rounded to the nearest dollar) is
A. $29,167.
B. $50,000.
C. $83,300.
D. $72,000.

15. A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $0. The journal entry to record this transaction is
A. debit Truck for $56,000, credit Accumulated Depreciation—Truck for $50,000, and credit Gain on Disposal for $6,000.
B. debit Truck for $50,000, debit Loss on Disposal for $6,000 and credit Accumulated Depreciation—Truck for $56,000.
C. debit Loss on Disposal $6,000, debit Accumulated Depreciation—Truck for $50,000, and credit Truck for $56,000.
D. debit Accumulated Depreciation—Truck for $50,000 and credit Truck for $50,000.

16. If the amount extracted from a coal mine was different every year for four years, you would
A. use the same depletion expense rate per unit each year.
B. recompute the depletion expense rate per unit each year.
C. credit accumulated depletion—coal mine for the same amount each year.
D. debit depletion expense for the same amount each year.

17. Which of the following would not be a liability according to FASB's definition of a liability?
A. An obligation to provide goods or services in the future
B. A note payable with no specified maturity date
C. The signing of a three-year employment contract at a fixed annual salary
D. An obligation that's estimated in amount

18. Mackey Company has a five-year mortgage for $100,000. In the first year of the mortgage, Mackey will report this liability as a
A. current liability of $20,000 and a long-term liability of $80,000.
B. long-term liability of $100,000.
C. current liability of $80,000 and a long-term liability of $20,000.
D. current liability of $100,000.

19. Using a 365-day year, the maturity value of a 180-day note for $2,700 at 9% annual interest is (rounded to the nearest cent)
A. $2,821.50.
B. $119.84.
C. $2,819.84.
D. $2,943.00.

20. Taylor Company has given you the following information from its aging of accounts receivable. The current amount in the allowance for doubtful accounts is a $958 credit.
Current    $24,400    2% uncollectible
31–60 days    7,350    8% uncollectible
61–90 days    3,380    15% uncollectible
91 and up    1,220    30% uncollectible

Using this information, what is the amount of the journal entry to record the allowance for doubtful accounts?
A. $991
B. $541
C. $1,949
D. $2,457

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