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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 137.Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally a.expensed when incurred. b.capitalized as a part of the cost of the asset. c.debited to the Accumulated Depreciation account. d.not recorded until they become material in amount. 138.Which of the following.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 147.If disposal of a plant asset occurs during the year, depreciation is a.not recorded for the year. b.recorded for the whole year. c.recorded for the fraction of the year to the date of the disposal. d.not recorded if the asset is scrapped. 148.If a fully depreciated plant.
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9 - 1 Accounting for Receivables 88.An aging of a company's accounts receivable indicates that $5,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a a.debit to Bad Debt Expense for $5,000. b.debit to Allowance for.
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9 - 1 Accounting for Receivables BE 188 On February 7, Jackson Company sold goods on account to Phillips Enterprises for $5,200, terms 2/10, n/30. On March 9, Phillips gave Jackson a 60-day, 12% promissory note in settlement of the account. Record the sale and the acceptance of the promissory note on the.
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9 - 1 Accounting for Receivables 148.When a note receivable is honored, Cash is debited for the note's a.net realizable value. b.maturity value. c.gross realizable value. d.face value. 149.Magneto Company had net credit sales during the year of $1,350,000 and cost of goods sold of $810,000. The balance in accounts receivable at the beginning of the year.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 97.Management should select the depreciation method that a.is easiest to apply. b.best measures the plant asset's market value over its useful life. c.best measures the plant asset's contribution to revenue over its useful life. d.has been used most often in the past by the company. 98.The depreciation.
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9 - 1 Accounting for Receivables Ex. 200 Megan's Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2014, the balance in Accounts Receivable was $680,000 and net credit sales amounted to $3,800,000 during 2014. An aging analysis of the accounts receivable indicated that $40,000 in accounts.
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9 - 1 Accounting for Receivables Ex. 206 Norton Company has accounts receivable of $40,000 in its general ledger at July 31: During August, the following transactions occurred. Aug.1Added 1% finance charges to $13,000 of credit card balances for not paying within the 30 day grace period. 15Sold $21,000 of accounts receivable to Iron Factors.
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9 - 1 Accounting for Receivables 98.In 2014, Chandler Company had net credit sales of $1,125,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2014, $42,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 67.Land improvements should be depreciated over the useful life of the a.land. b.buildings on the land. c.land or land improvements, whichever is longer. d.land improvements. 68.Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by.
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9 - 1 Accounting for Receivables 78.Allowance for Doubtful Accounts on the balance sheet a.is offset against total current assets. b.increases the cash realizable value of accounts receivable. c.appears under the heading "Other Assets." d.is offset against accounts receivable. 79.When an account is written off using the allowance method, the a.cash realizable value of total accounts receivable will.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 31.If a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods sold section of the income statement. 32.Depletion cost per unit is computed by dividing the total cost of a natural resource by the estimated.
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9 - 1 Accounting for Receivables BRIEF EXERCISES BE 180 Record the following transactions for Lett Company. 1.On August 4, Lett sold merchandise on account to Smiley Company for $610, terms 2/10, n/30. 2.On August 7, Lett granted Smiley a sales allowance and reduced the cost of the merchandise by $60 because some of the goods.
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9 - 1 Accounting for Receivables 118.T’Pol Furniture factors $900,000 of receivables to Trip Factors, Inc. Trip Factors assesses a 2% service charge on the amount of receivables sold. T’Pol Furniture factors its receivables regularly with Trip Factors. What journal entry does T’Pol make when factoring these receivables? a.Cash882,000 Loss on Sale of Receivables18,000 Accounts.
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9 - 1 Accounting for Receivables COMPLETION STATEMENTS               219.Accounts receivable, which are also referred to as ______________ receivables, are amounts owed by customers on account.               220.The three primary accounting problems associated with accounts receivable are (1) ______________, (2) _______________, and (3) ______________ of accounts receivable.               221.In order to encourage prompt payment of.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 51.Recognition of depreciation permits the accumulation of cash for the replacement of the asset. 52.When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method. 53.Depletion expense is reported in.
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9 - 1 Accounting for Receivables EXERCISES Ex. 192 Presented below are various receivable transactions entered into by Beran Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet. a.Loaned a company officer $5,000. b.Accepted a $3,000 promissory note from a customer as payment on account. c.Determined.
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9 - 1 Accounting for Receivables Ex. 194 Record the following transactions for Adcock Company. 1.On April 12, sold $11,000 of merchandise to Milton Inc., terms 2/10, n/30. 2.On April 15, Milton returned $2,000 of merchandise. 3.On April 22, Milton paid for the merchandise. Ex. 195 (a)On January 6, Whitson Co. sells merchandise on account to Garcia Inc..
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 21.Capital expenditures are expenditures that increase the company's investment in productive facilities. 22.Ordinary repairs should be recognized when incurred as revenue expenditures. 23.A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership. 24.Once an asset is fully depreciated, no.
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9 - 1 Accounting for Receivables Ex. 203 Avett Furniture Store has credit sales of $400,000 in 2014 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets MULTIPLE CHOICE QUESTIONS 57.The cost of a purchased building includes all of the following except a.closing costs. b.real estate broker's commission. c.remodeling costs. d.All of these are included. 58.A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 157.A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a a.gain of $6,000. b.loss of $6,000. c.credit to the Equipment account for $12,000. d.credit to Accumulated.
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9 - 1 Accounting for Receivables 128.The two key parties to a promissory note are the a.maker and a bank. b.debtor and the payee. c.maker and the payee. d.sender and the receiver. 129.When calculating interest on a promissory note with the maturity date stated in terms of days, the a.maker pays more interest if 365 days are used.
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9 - 1 Accounting for Receivables Ex. 199 The December 31, 2013 balance sheet of Barone Company had Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2014, the following transactions occurred: sales on account $1,500,000; sales returns and allowances, $50,000; collections from customers, $1,250,000; accounts.
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9 - 1 Accounting for Receivables Ex. 216 Fine Boat Company often requires customers to sign promissory notes for major credit purchases. Journalize the following transactions for Fine Boat Company. Feb.12Accepted a $25,000, 6%, 60-day note from Bob Yates for a 24-foot motorboat built to his specifications. April14Received notification from Bob Yates that he was.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 87.A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is a.20%. b.2%. c.8%. d.25%. 88.A company purchased factory.
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9 - 1 Accounting for Receivables SHORT-ANSWER ESSAY QUESTIONS S-A E  234 Management can choose between two bases in calculating the estimated uncollectible accounts under the allowance method. One basis emphasizes an income statement viewpoint whereas the other emphasizes a balance sheet viewpoint. Identify the two bases and contrast the two approaches. How do.
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9 - 1 Accounting for Receivables Ex. 215 Record the following transactions in general journal form for Karen Heller Company. July1Received a $20,000, 8%, 3-month note, dated July 1, from Nancy Freeman in payment of her open account. Oct.1Received notification from Nancy Freeman that she was unable to honor her note at this time. It.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 77.Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a.Salvage value b.Estimated useful life c.Cash needed to replace the plant asset d.Cost 78.Depreciation is the process of allocating the cost of a plant asset over its service life.
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9 - 1 Accounting for Receivables Ex. 196 Fleming Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2013, and December 31, 2014, appear below: 12/31/1312/31/14 Net Credit Sales$400,000$500,000 Accounts Receivable60,00080,000 Allowance for Doubtful Accounts5,200? Instructions (a)Record the.
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9 - 1 Accounting for Receivables 158.Writing off an uncollectible account under the allowance method requires a debit to a.Accounts Receivable. b.Allowance for Doubtful Accounts. c.Bad Debt Expense. d.Uncollectible Accounts Expense. 159.When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense a.increases net income. b.decreases current assets. c.has no effect on current assets. d.has.
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9 - 1 Accounting for Receivables Ex. 197 Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2014, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:               Estimated Percentage          Uncollectible   Current Accounts$120,0001% 1–30 days past due20,0003% 31–60 days past due10,0006% 61–90 days past.
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9 - 1 Accounting for Receivables Ex. 211 Compute the missing amount for each of the following notes: PrincipalAnnual Interest RateTimeTotal Interest ——————————————————————————————————————— (a)$40,00010%2.5 years? ——————————————————————————————————————— (b)$120,000?9 months$7,200 ——————————————————————————————————————— (c)?10%90 days$1,500 ——————————————————————————————————————— (d)$40,0009%?$1,200 ——————————————————————————————————————— Ex. 212 Joe's Supply Co. has the following transactions related to notes receivable during the last 2 months of 2014. Nov.   1Loaned $20,000 cash to Sara Rondelli on a 1-year, 12% note. Dec..
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 41.Research and development costs which result in a successful product which is patentable are charged to the Patent account. 42.The cost of a patent must be amortized over a 20-year period. 43.The cost of a patent should be amortized over its legal life or.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets TRUE-FALSE STATEMENTS 1.All plant assets (fixed assets) must be depreciated for accounting purposes. 2.When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. 3.When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 117.Drago Company purchased equipment on January 1, 2014, at a total invoice cost of $1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31,.
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9 - 1 Accounting for Receivables Ex. 201 The income statement approach to estimating uncollectible accounts expense is used by Kerley Company. On February 28, the firm had accounts receivable in the amount of $437,000 and Allowance for Doubtful Accounts had a credit balance of $2,140 before adjustment. Net credit sales for February.
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9 - 1 Accounting for Receivables Ex. 208 Wainwright Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred. Jan. 15Made Wainwright credit card sales totaling $24,000. (There were no balances prior to January 15.) 20Made Visa credit card sales (service charge fee 2%) totaling $7,000. Feb. 10Collected.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 11.In calculating depreciation, both plant asset cost and useful life are based on estimates. 12.Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had.
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9 - 1 Accounting for Receivables Ex. 213 Morton Company had the following select transactions. Apr.    1, 2014Accepted Remington Company's 1-year, 12% note in settlement of a $25,000 account receivable. July    1, 2014Loaned $15,000 cash to Jenny Green on a 9-month, 10% note. Dec. 31, 2014Accrued interest on all notes receivable. Apr.    1, 2015Received principal plus interest.
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9 - 1 Accounting for Receivables S-A E  239 Your roommate is uncertain about the advantages of a promissory note. Compare the advantages of a note receivable with those of an account receivable. S-A E 240(Ethics) Seaver Books, a small book publishing company, wrote off the debt of The Learning Center, and the Academy of.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 167.In computing depletion, salvage value is a.always immaterial. b.ignored. c.impossible to estimate. d.included in the calculation. 168.If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons, a.total depletion on the mine is based on the 1,200,000 tons. b.depletion expense is recognized on the 1,500,000.
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9 - 1 Accounting for Receivables Ex. 204 An inexperienced accountant made the following entries. In each case, the explanation to the entry is correct. Dec.17Cash.............................................2,940 Sales Discounts....................................60 Accounts Receivable...........................3,000 (To record collection of 12/4 sales, terms 2/10, n/30) 20Cash.............................................18,360 Notes Receivable .............................18,000 Interest Revenue ..............................360 (Collection of $18,000, 8%, 90 day note dated Sept. 21. Interest had been accrued through.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 127.Able Towing Company purchased a tow truck for $180,000 on January 1, 2014. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $36,000. On December 31, 2016, before adjusting entries had been made, the.
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10 - 1 Plant Assets, Natural Resources, and Intangible Assets 107.Moreno Company purchased equipment for $900,000 on January 1, 2013, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $40,000 salvage value at the end of its useful life. The.
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9 - 1 Accounting for Receivables 138.Notes receivable are recognized in the accounts at a.cash (net) realizable value. b.face value. c.gross realizable value. d.maturity value. 139.A note receivable is a negotiable instrument which a.eliminates the need for a bad debts allowance. b.can be transferred to another party by endorsement. c.takes the place of checks in a business firm. d.can only be.
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9 - 1 Accounting for Receivables 168.The accounts receivable turnover is computed by dividing a.total sales by average net accounts receivable. b.net credit sales by average net accounts receivable. c.total sales by ending net accounts receivable. d.net credit sales by ending net accounts receivable. 169.Which receivables accounting and reporting issue is not essentially the same for IFRS.
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9 - 1 Accounting for Receivables MATCHING 233.Match the items below by entering the appropriate code letter in the space provided. A.Aging of receivablesF.Percentage of receivables basis B.Direct write-off methodG.Factoring C.Promissory noteH.Dishonored note D.Trade receivablesI.Average collection period E.Percentage of sales basisJ.Credit card sales _____              1.A written promise to pay a specified amount on demand or at a definite time. _____             .
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9 - 1 Accounting for Receivables BE 184 Newton Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred. Oct.15Sold $15,000 of accounts receivable to Fast Factors, Inc. who assesses a 3% finance charge. 25Made sales of $800.
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