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$20,500
$22,000
4. (TCOs B, E) A small and private company may be able to justify
using a cash basis of accounting if it has _____. (Points : 5)
sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account
5. (TCO D) Three companies report the same cost of goods available for
sale, but each employs a different inventory costing method. If the price
of goods has increased during the period, then the company using _____.
(Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between
FIFO and LIFO
6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges
amounted to $2,800 and there was a cost of $8,000 for building a
foundation and installing the equipment. It is estimated that the
equipment will have a $12,000 salvage value at the end of its 5-year
useful life. Depreciation expense each year using the straight-line
method will be _____. (Points : 5)
$14,160
$11,760
$9,840
$9,600
7. (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000
bonds dated January 1, 2007, at 103. The journal entry to record the
issuance will show a _____. (Points : 5)
debit to Cash of $2,000,000
debit to Premium on Bonds Payable for $60,000
credit to Bonds Payable for $2,000,000
credit to Cash for $2,060,000