The Value Of Money1 Use The Principle To Estimate
Use The Principle To Estimate warranty liabilities. A. matching B. entity C. objectivity D. conservatism 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/$125,000) à— $150,000. B. ($55,000/$95,000) à— $125,000. C. ($55,000/$150,000) à— $125,000. D. ($55,000/$95,000) à— $150,000. A $400,000 issue of bonds that sold for $363,000 matures on August 1, 2015. The journal entry to record the payment of the bond on the maturity date is A. debit cash, $400,000; credit bonds payable, $400,000. B. debit bonds payable, $400,000; credit cash, $400,000. C. debit bonds payable, $363,000; credit cash, $363,000. D. debit cash, $363,000; credit bonds payable, $363,000. By not accruing warranty expense, A. reported expenses will be understated, and net income will be understated. B. reported liabilities will be overstated, and net income will be understated. C. reported expenses will be overstated, and reported liabilities will be understated. D. reported liabilities will be understated, and net income will be overstated. 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 be 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. $5,525 B. $5,067 C. $4,250 D. $7,. If the amount extracted from a coal mine was different every year for four years, you would A. debit depletion expense for the same amount each year. B. credit accumulated depletion—coal mine for the same amount each year. C. use the same depletion expense rate per unit each year. D. recompute the depletion expense rate per unit each year. Casey Company's bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50. Casey's book balance shows outstanding checks of $5,288 and deposits in transit of $9,325. The bank-side reconciliation would show cash of A. $43,217. B. $47,304. C. $39,230. D. $43,267. Which of the following would indicate poor internal control over accounts receivable? A. The person handling cash receipts passes the receipts to someone who enters them into accounts receivable. B. The mailroom employees open the mail and give the cash receipts to another employee. C. The person who handles accounts receivable wouldn't write off accounts as uncollectable. D. The same person handling cash receipts also records the accounts receivable transactions. Research and development costs (R&D) are generally A. expensed and become part of the income statement. B. listed as "other intangibles" on the
balance sheet. C. listed as "current assets" on the balance sheet. D. listed as "long-term assets" on the balance sheet. 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. $1,584,88. B. $1,520.13. C. $20.13. D. $1,605.00. 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. $50,000. B. $83,300. C. $29,167. D. $72,000. 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. 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 long-term liabilities. The quick ratio for Rick Company is A. 6.14. B. 5.34. C. 3.34. D. 4.64. Which of the following would not be a liability according to FASB's definition of a liability? A. The signing of a three-year employment contract at a fixed annual salary B. An obligation to provide goods or services in the future C. An obligation that's estimated in amount D. A note payable with no specified maturity date A patent has amortization this year of $2,300. The journal entry would be A. debit Accumulated Amortization—Patent, $2,300; credit Amortization Expense—Patent, $2,300. B. debit Amortization Expense—Patent, $2,300; credit Patent, $2,300. C. debit Amortization Expense—Patent, $2,300; credit Accumulated Depreciation—Patent, $2,300. D. debit Accumulated Amortization—Patent, $2,300; credit Patent, $2,300. Which marketable securities are reported at market value on the balance sheet date? A. Trading securities B. Held-to-maturities securities C. Available-for-sale and trading securities D. Available-for-sale securities 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 $50,000, debit Loss on Disposal for $6,000 and credit Accumulated Depreciation—Truck for $56,000. B. debit Accumulated Depreciation—Truck for $50,000 and credit Truck for $50,000. C. debit Truck for $56,000, credit Accumulated Depreciation—Truck for $50,000, and credit Gain on Disposal for $6,000. D. debit Loss on Disposal $6,000, debit Accumulated Depreciation—Truck for $50,000, and credit Truck for $56,000. 18. 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. +$810. B. +$710. C. +$760. D. −$710. 19. 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 Cash for $500, debit Truck for
$50,000, debit Loss on Disposal for $5,500, 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 Cash for $500, debit Accumulated Depreciation—Truck for $50,000, debit Loss on Disposal for $5,500, and credit Truck for $56,000. 20. Margaret is a customer of Tammy Company. The company wrote off her account of $1,200 on August 15. On October 12, she sent in a payment of $560. What will Tammy Company record first to reinstate her account? A. Debit Uncollectible Accounts Expense; credit Accounts Receivable/Margaret. B. Debit Cash; credit Accounts Receivable/Margaret. C. Debit Allowance for Doubtful Accounts; credit Accounts Receivable/Margaret. D. Debit Accounts Receivable/Margaret; credit Allowance for Doubtful Accounts.
Paper For Above instruction
The assignment provides a set of accounting-related questions focusing on various principles, transactions, and financial reporting techniques. The core task is to analyze and answer each multiple-choice question based on knowledge of accounting principles such as valuation of liabilities, initial recording of assets, bond issuance and redemption, warranty expense accrual, allowance for doubtful accounts, depletion, bank reconciliation, internal controls, research and development costs, interest calculations, asset depreciation, and accounting for marketable securities. To effectively address these questions, a comprehensive understanding of accounting standards, financial statement presentation, and internal control procedures is essential.
In the first question, the focus is on estimating warranty liabilities using the appropriate accounting principle. The correct answer is 'conservatism' because it emphasizes prudence in recognizing liabilities. This principle ensures that potential losses are recognized promptly, avoiding overstated assets or understated liabilities. The principle of conservatism acts as a safeguard against overly optimistic reporting and aligns with ethical accounting practices (Whittington & Pany, 2019).
The second question deals with the allocation of costs in a basket purchase. When multiple items are bought together, their individual recorded values are proportional to their appraised values. Therefore, the value for item B is determined by the ratio of its appraised value to the total appraised values, multiplied by the purchase price. After calculations, the correct recording amount for item B is based on the proportional allocation of the acquisition cost, which in this case is represented by option B.
Question three examines bond payment recording at maturity. Since bonds are obligations of the issuer,
paying them reduces liabilities and cash. The correct journal entry involves debiting bonds payable and crediting cash, reflecting the settlement of the debt. This straightforward accounting treatment aligns with standard practices for bond redemption (Higgins, 2018).
Question four involves understanding the impact of not accruing warranty expenses. Omitting this accrual understates expenses, as the incurred costs are not recognized, leading to an understatement of net income. Additionally, liabilities related to warranties are understated because the obligations are not recorded until expenses are accrued, affecting financial statement accuracy (Kieso, Weygandt, & Warfield, 2020).
Question five considers estimating uncollectible accounts using a percentage of sales method. The calculation involves multiplying credit sales by the estimated percentage uncollectible, disregarding the existing allowance balance. This approach aligns with conservative estimates and provides a straightforward way to estimate doubtful accounts.
Depletion expense calculations in subsequent questions emphasize the importance of consistent rates, especially when resource extraction fluctuates annually. Recomputing or applying the same rate per unit ensures accurate expense recognition over the resource's productive life (Tucker & Russell, 2021).
Bank reconciliation processes are outlined in questions about cash balances and adjustments for outstanding checks, deposits in transit, and bank charges. These adjustments ensure that the company's ledger shows an accurate cash position, matching the bank statement after reconciling timing differences and bank fees (Warren, Reeve & Fess, 2020).
Internal control questions highlight the importance of segregating duties to prevent fraud and errors. Having the same person handle cash receipts and record transactions is weak internal control, increasing the risk of theft or misstatement (Albrecht, 2019).
Research and development costs are generally expensed in the period incurred, reflecting their uncertain future benefits. This treatment aligns with accounting standards that prioritize prudence and consistency in financial reporting (FASB, 2023).
Interest calculation questions test understanding of simple interest formulas over different periods. Using the principal, rate, and time, the maturity value is computed, and the correct answers exemplify accurate application of these basic formulas.
Asset disposal entries, including scrapping equipment or assets, involve recognizing accumulated
depreciation and losses or gains based on the residual book value versus disposal proceeds. These transactions ensure asset removal and proper reflection of losses or gains in financial statements.
Finally, questions about reintegration of accounts after write-offs involve adjusting entries that restore receivables and allowances, maintaining accurate records of customer balances and ensuring proper collection procedures are followed.
References
Albrecht, W. S. (2019). *Internal Control and Fraud Prevention*. Wiley.
FASB. (2023). *Accounting Standards Update*. Financial Accounting Standards Board.
Higgins, R. C. (2018). *Analysis for Financial Management*. McGraw-Hill Education.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). *Intermediate Accounting*. Wiley.
Tucker, L., & Russell, J. (2021). *Resource Accounting and Depletion*. Journal of Business Finance & Accounting.
Warren, C. S., Reeve, J. M., & Fess, P. E. (2020). *Financial & Managerial Accounting*. Cengage Learning.
Whittington, O. R., & Pany, K. (2019). *Principles of Auditing & Assurance*. McGraw-Hill Education.