Fluent Essays

Problem 4 Tray Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life.InstructionsCompute annual depreciation for the first and second years using the(a)        Straight-line method.(b)        Double-declining-balance method Please answer all multiple choice questions and problems. 1. Which of the following violates of internal control? Please answer all multiple choice questions and problems. 1. Which of the following violates of internal control? a. Only one employee is responsible for custodianship of the petty cash fund. b. An employee switches from being responsible for accounts payable to being responsible for accounts receivable. c. Only one employee is responsible for authorizing payment of a bill and writing the check paying the bill. d. All checks are prenumbered. 2. When the allowance method of accounting for uncollectible accounts is used, Bad Debts Expense is recorded a. in the year after the credit sale is made. b. in the same year as the credit sale. c. as each credit sale is made. d. when an account is written off as uncollectible 3. When employees are bonded a. they have been insured against misappropriation of assets. b. it means that they are not allowed to handle cash. c. they have worked for the company for at least 10 years. d. it is impossible for them to steal from the company. 4. A voucher system is a series of prescribed control procedures a. to check the credit worthiness of customers. b. which eliminates the need for a sales journal. c. specifically designed for small firms who may not have checking accounts d. designed to assure that disbursements by check are proper. 5. Which of the following violates of internal control? a. Only one employee is responsible for custodianship of the petty cash fund. b. An employee switches from being responsible for accounts payable to being responsible for accounts receivable. c. Only one employee is responsible for authorizing payment of a bill and writing the check paying the bill. d. All checks are prenumbered. 6. Which one of the following is not an objective of a system of internal controls? a. Safeguard company assets b. Overstate liabilities in order to be conservative c. Reduce the risks of errors d. Enhance the accuracy and reliability of accounting records 7. Which of the following would improve control over cash disbursements? a. All disbursements should be made out of cash receipts. b. The same person should approve the disbursement and sign the check. c. The same person should not sign the checks and prepare the bank reconciliation. d. Each check should be supported by a petty cash voucher. 8. The sale of receivables by a business a. can be a quick way to generate cash for operating needs. a. indicates that the business is in financial difficulty. c. is generally the major revenue item on its income statement. d. is an indication that the business is owned by a factor. 9. The advantages of receiving the monthly bank statement are all but which of the following? a. It gives a company concrete information about activity in its bank account. b. Transactions are shown in chronological order. c. It is prepared by company personnel. d. It comes every month. 10. Depletion is the exhaustion of a natural resource that results from: a. natural causes. b. excessive use. c. All of the other answers are correct. d. the physical removal of part of the natural resource. 11. Physical controls to safeguard assets do not include a. vaults. b. security guards. c. employee identification badges. d. cashier department supervisors. 12. The fundamental difference between tangible assets and intangible assets is: a. the size of the asset. b. the value of the asset. c. the presence of physical characteristics. d. both the size and value of the asset. 13. The net realizable value of accounts receivable is the: a. balance in Allowance for Uncollectible/Doubtful Accounts. b. Accounts Receivable balance plus the Allowance for Uncollectible/Doubtful Accounts balance after the year-end adjustment. c. balance in Accounts Receivable after the year-end adjustment. d. amount expected to be collected from accounts receivable. 14. When disposing of a plant asset, the asset account is credited for the: a. net asset value. b. original cost of the asset. c. assets accumulated depreciation to date. d. All of the above answers are correct. 14. Two individuals at a retail store work the same cash register. You evaluate this situation as a. a violation of segregation of duties. b. a violation of establishment of responsibility. b. supporting the establishment of responsibility. c. supporting internal independent verification. 15. The major advantage of receiving monthly bank statements is: a. that they give a company concrete information about its investments. b. the company can accept the balance per bank as its correct cash balance c. the company can prepare bank reconciliations and record any necessary journal entries. d. that transactions are shown in chronological order. 16. A truck with a cost of $24,000 is still being used but has already been fully depreciated. The balance in the Accumulated Depreciation account is: a. Cannot be determined without knowing the estimated useful life and depreciation method. b. $2,000 c. $24,000 d. $22,000 17. A promissory note a. is not a formal credit instrument. b may be used to settle an accounts receivable. c. has the party to whom the money is due as the maker. d. cannot be factored to another party. 18. Accounts receivable turnover is found by dividing: a. Average net accounts receivable by net credit sales. b. Net credit sales or net sales by average net accounts receivable. c. Average net accounts receivable by net sales. d. All of the above answers are incorrect. 19. The interest on a $6,000, 6\%, 60-day note receivable is a. $60 b. $240. c. $40. d. $80. 20. The Allowance for Uncollectible Accounts (also called Allowance for Doubtful Accounts) is: a. credited every time an uncollectible account is written off. b. debited at the end of each year by an adjusting entry. c. an expense account used to accumulate the uncollectible accounts expense that will appear in the income statement. d. a contra-asset account to Accounts Receivable. PROBLEMS Problem 1 The following information pertains to Family Video Company. Cash balance per bank, July 31, $8,000. Debit memo: July bank service charge not recorded by the depositor $37. Cash balance per books, July 31, $8,021. Deposits in transit, July 31, $1,510. Credit memo: Bank collected $900 note for Family in July, plus interest $36, less fee $10. The collection has not been recorded by Family, and no interest has been accrued. Outstanding checks, July 31, $600. Prepare a bank reconciliation at July 31 in space below: Family Video Company Bank Reconciliation July 31 _________________________________________________________________ Problem 2 Compute bad debts expense based on the following information: (a) Merrill Company estimates that 3\% of net credit sales will become uncollectible. Credit sales are $300,000, sales returns and allowances are $15,000, and the allowance for doubtful/uncollectible accounts has a $1,000 credit balance. (b) Merrill Company estimates that 2\% of accounts receivable will become uncollectible. Accounts receivable are $70,000 at the end of the year, and the allowance for doubtful/uncollectible accounts has a $2,000 debit balance. Show computation in space below and journal entries for (a) and (b) in box below: (tab to move between boxes) Date Account Debit Credit Problem 3 Mace Distributors has the following transactions related to notes receivable during the last month of the year. Dec. 1 Loaned $16,000 cash to K. Brown on a 1-year, 9\% note. 16 Sold goods to F. Jacobs, receiving a $7,000, 60-day, 6\% note. 31 Accrued interest revenue on all notes receivable. Instructions Journalize the transactions for Mace Distributors for all 3 dates Date Account Debit Credit Problem 4 Tray Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life. Instructions Compute annual depreciation for the first and second years using the (a) Straight-line method. (b) Double-declining-balance method