Answers to Practice Test (chapters 8,9, 10a)
Multiple Choice
1E
2E
3D
4A
5A
6B
7D
8B
9E
10 A
11 D
12 C
13 B
14 D
15 A
16 D
17 A
18 D
19 E
20 D
21 B
22 A
23 D
Problem 1
Bank Balance
14,350
Less:
outstanding checks
(4,180)
Add:
Bank error of safe dep charge
Dep in transit
Adj Bank Bal
Book Balance
Less:
40
3,000
13,210
Adj book balance
Journal Entries
Phone Exp
Cash
450
A/R
Cash
100
450
100
Bank Expense
Cash
25
Bank Expense
Cash
20
Book error, Chk 2222
NSF Check
NSF Check charge
Bank Service charge
25
20
13,805
(450)
(100)
(25)
(20)
13,210
Problem #2
Petty Cash
Cash
Postage Expense
Food expense
Delivery Exp (or Merch Invent)
Office Supplies Exp
Cash over and short
Cash
300
300
140.00
36.20
27.49
58.97
8.34
271.00
Problem #3
Sept. 1
Cash
636.50
Credit card expense* 33.50
Sales
670
To record credit card sales less fee.
1 CGS
Merch inventory
450
2 Cash
Sales
To record cash sales
256
2 CGS
Merch Inv
175
450
256
175
5 A/R - Plas Fant
1,251.30
Credit Card Exp
38.70
Sales
To record credit card sales.
5 CGS
Merch Inv
850
850
6 A/R - Plas Fant
1,988.50
Credit Card Exp
61.50
Sales
To record credit card sales.
6 CGS
Merch Inv
1,290.00
2,050.00
1425
1425
7 No journal entry required.
10 Cash
1,368.00
Credit card expense*
72
Sales
1,440.00
To record credit card sales less fee.
*($1,440 x .05)
10 CGS
Merch Inv
1020
1020
17 Cash
3,239.80
A/R - Plas Fant
3,239.80
To record cash received from credit card company.
Problem #4
1a
1b
1c
2
Bad Debt Exp
Allowance for Doubtful accounts
120,720
Bad Debt Exp
Allowance for Doubtful accounts
63,860
Bad Debt Exp
Allowance for Doubtful accounts
26,354
Accounts receivable
Less: Allowance for doubtful accounts
120,720
63,860
26,354
692,300
149,750
542,550
Cost of machine ..............................................................
$470,000
Less estimated salvage value .......................................
45,000
Total depreciable cost ....................................................
$425,000
Year
1 ..............
2 ..............
3 ..............
4 ..............
5 ..............
Totals ........
StraightLinea
$ 85,000
85,000
85,000
85,000
85,000
$425,000
DoubleDeclining
Balancec
$188,000
112,800
67,680
40,608
15,912
$425,000
Units-ofProductionb
$100,000
75,000
175,000
50
74,950
$425,000
a
Straight- line:
Cost per year = $425,000/5 years = $85,000 per year
b
Units-of-production:
Cost per unit = $425,000/85,000 units = $5 per unit
Year
1................
2................
3................
4 ..............
5................
Total .........
*
Units
20,000
15,000
35,000
10
22,000
Unit Cost
$5
5
5
5
5
Depreciation
$ 100,000
75,000
175,000
50
74,950*
$425,000
Take only enough depreciation in Year 5 to reduce book
value to the asset’s $425,000 salvage value.
c
Double-declining-balance:
(100%/5) x 2 = 40% depreciation rate
Year
1.........
2.........
3.........
4 ........
5 ........
Total ..
Beginning
Book
Value
$470,000
282,000
169,200
101,520
60,912
Annual
Depreciation
(40% of
Book Value)
$188,000
112,800
67,680
40,608
15,912**
$425,000
Accumulated
Depreciation
at the End of
the Year
$188,000
300,800
368,480
409,088
425,000
Ending Book Value
($470,000 Cost Less
Accumulated
Depreciation)
$282,000
169,200
101,520
60,912
45,000
Problem #5
Cost of machine ..............................................................
$470,000
Less estimated salvage value .......................................
45,000
Total depreciable cost ....................................................
$425,000
Year
1 ..............
2 ..............
3 ..............
4 ..............
5 ..............
Totals ........
StraightLinea
$ 85,000
85,000
85,000
85,000
85,000
$425,000
DoubleDeclining
Balancec
$188,000
112,800
67,680
40,608
15,912
$425,000
Units-ofProductionb
$100,000
75,000
175,000
50
74,950
$425,000
a
Straight- line:
Cost per year = $425,000/5 years = $85,000 per year
b
Units-of-production:
Cost per unit = $425,000/85,000 units = $5 per unit
Year
1................
2................
3................
4 ..............
5................
Total .........
*
Units
20,000
15,000
35,000
10
22,000
Unit Cost
$5
5
5
5
5
Depreciation
$ 100,000
75,000
175,000
50
74,950*
$425,000
Take only enough depreciation in Year 5 to reduce book
value to the asset’s $425,000 salvage value.
c
Double-declining-balance:
(100%/5) x 2 = 40% depreciation rate
Year
1.........
2.........
3.........
4 ........
5 ........
Total ..
Beginning
Book
Value
$470,000
282,000
169,200
101,520
60,912
Annual
Depreciation
(40% of
Book Value)
$188,000
112,800
67,680
40,608
15,912**
$425,000
Accumulated
Depreciation
at the End of
the Year
$188,000
300,800
368,480
409,088
425,000
Ending Book Value
($470,000 Cost Less
Accumulated
Depreciation)
$282,000
169,200
101,520
60,912
45,000