ACC – The Value of Money Assignment

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Description

The Value of Money

1. Brandon Company completed an aging of its accounts receivable and came up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectible accounts, how much will the credit be to the allowance for doubtful accounts if Brandon uses the percent of credit sales as its method of estimating uncollectible accounts?
A. $5,067
B. $4,250
C. $7,159
D. $5,525

2. Brandon Company completed an aging of its accounts receivable and came up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectable accounts, how much will the credit be to the allowance for doubtful accounts if Brandon uses the estimate of aging receivables as its method of estimating uncollectable accounts?
A. $7,159
B. $5,067
C. $4,250
D. $5,525

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

4. 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. $72,000.
B. $83,300.
C. $29,167.
D. $50,000.

5. Which of the following marketable securities are reported at market value on the balance sheet date?
A. Held-to-maturities securities
B. Available-for-sale securities
C. Trading securities
D. Available-for-sale and trading securities

6. Brandon Corporation purchased a vein of mineral ore for $3,250,000. It is estimated that 15,000,000 tons of ore are available to be extracted. The salvage value is determined to be $400,000. The estimation depletion expense for this year’s extraction of 1,760,000 tons of ore (rounded to the nearest dollar) is
A. $428,267.
B. $381,333.
C. $334,400.
D. $400,000.

7. Cash equivalents are
A. not liquid and carry high risk.
B. very liquid and carry little risk.
C. not liquid and carry little risk.
D. very liquid and carry high risk.

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. +$810.
C. –$710.
D. +$760.

9. 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. $119.84.
B. $2,943.00.
C. $2,819.84.
D. $2,821.50.

10. Which marketable securities are reported at cost on the balance sheet date?
A. Held-to-maturity securities
B. Available-for-sale securities
C. Trading and held-to-maturity securities
D. Trading securities

11. 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. 78.6%.
B. 127.3%.
C. 70.2%.
D. 239.3%.

12. 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. $1,605.00.
B. $20.13.
C. $1,520.13.
D. $1,584,88.

13. Margaret is a customer of Tammy Company. The company wrote off her account of $1,200 on August15. On October 12, she sent in a payment of $560. What will Tammy Company record first to reinstate
her account?
A. Debit Cash; credit Accounts Receivable/Margaret.
B. Debit Uncollectible Accounts Expense; credit Accounts Receivable/Margaret.
C. Debit Accounts Receivable/Margaret; credit Allowance for Doubtful Accounts.
D. Debit Allowance for Doubtful Accounts; credit Accounts Receivable/Margaret.

14. Nick Company has cash of $33,000; net accounts receivable of $41,000; short-term investments of $15,000; and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term
liabilities. The quick ratio for Nick Company is
A. 3.80.
B. 2.97.
C. 1.78.
D. 3.30.

15. Rick Company has cash of $143,000; net accounts receivable of $89,000; short-term investments of $35,000; and prepaid expenses of $40,000. It also has $50,000 in current liabilities and $80,000 in longterm liabilities. The quick ratio for Rick Company is
A. 3.34.
B. 4.64.
C. 6.14.
D. 5.34.

16. Research and development costs (R&D) are generally
A. listed as “other intangibles” on the balance sheet.
B. listed as “long-term assets” on the balance sheet.
C. expensed and become part of the income statement.
D. listed as “current assets” on the balance sheet.

17. Meranda Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000 and is expected to produce 50,000 units in its lifetime. During the first year of operation, it produced 14,500 units. To the nearest dollar, the depreciation for the first year under the units of production method
will be
A. $31,250.
B. $35,500.
C. $33,350.
D. $36,250.

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

19. By not accruing warranty expense,
A. reported liabilities will be overstated, and net income will be understated.
B. reported liabilities will be understated, and net income will be overstated.
C. reported expenses will be understated, and net income will be understated.
D. reported expenses will be overstated, and reported liabilities will be understated.

20. 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/$150,000) × $125,000.
B. ($55,000/$95,000) × $150,000.
C. ($55,000/$125,000) × $150,000.
D. ($55,000/$95,000) × $125,000.

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