1. Under the allowance method of accounting for uncollectible accounts: (MULTIPL

Question

1. Under the allowance method of accounting for uncollectible accounts: (MULTIPLE CHOICE)

a) the cash realization value of accounts receivable is greater before an account is written off than after it is written off.

b) Bad Debit expense is debited when a specific account is written off as uncollectible

c) the cash realizable value of accounts is in the balance sheet is the same before and after an account is written off

d) Allowance for Doubtful Accounts is closed each year to income summary

2. The balance in the Accumulated Depreciation account represents the: (MULTIPLE CHOICE QUESTION)

a) cash fund to be used to replace plant assets

b) amount to be deducted from the cost of the plant asset to arrive at its fair market value

c) amount charged to expense in the current period

d) amount charged to expense since the acquisition of the plant asset

3. Button company purchases land for $90,000 cash. Button assumes $2,500 in property taxes due on the land. The title and attorney dees totaled $1,000. Button has the land graded for $2,200. They paid $10,000 for paving of the parking lot. They also paid an architect a fee of $15,000 to design a new office building that will go on the site. What amount does Burke record as the cost of the land?

a. $93,200 b.105,700 c. 95,700 d.120,700

4. Moss County Bank agrees to lend the Sands Brick Company $300,000 on January 1. Sand Brick Company signs a $300,000, 6%, 9-month note. What entry will Sands Brick Company make to pay off the note and interest at maturity assuming NO interest has been accrued through September 30?

Explanation / Answer

Q1. Answer is C. the cassh realisable value of accounts is in the balance Sheet is the same before and after n account is written off. Q2. Answer is D. Amount charged to expense since the acquisition of the plant asssets. Q3. Answer is C. $ 95,700 Explanation: The cost of land: 90,000 Add: Property taxes 2,500 Add: Title and attorney deeds 1,000 Add: Cost of grading 2,200 Total cost of land 95,700 Q4. Journal entry: Notes payable Dr. 300,000 Interest expense Dr. (300,000*6%*9/12) 13500       Cash Account 313500

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