Test Bank Solutions Accounting Principles 12th Edition Weygandt Kimmel KiesoTest Bank All Chapters, Achievement Test,Comprehensive Examination, Final Exam Are Included, Download: https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmel- kieso-test-bank/ Solutions Manual For Accounting Principles, 12th Edition Weygandt Kimmel Kieso Complete Download: https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmel- kieso-solutions-manual/ Achievement Test 5: Chapters 9 and 10 Name _____________________________ Accounting Principles, 12e Instructor __________________________ Weygandt, Kimmel, & Kieso Section # __________ Date ___________ Part I II III IV V VI VII Total Points 24 5 18 10 13 15 15 100 Score PART I — MULTIPLE CHOICE (24 points) Instructions: Designate the best answer for each of the following questions. ____ 1. Randall Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Randall's new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new building, and $55,000 was paid for a parking lot and necessary walkways and driveways. For how much should the new office building be recorded? a. $1,662,000. b. $1,680,000. c. $1,684,000. d. $1,629,000. ____ 2. Randall Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Randall’s new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new building, and $55,000 was paid for a parking lot and necessary walkways and driveways. For how much should the land be recorded? a. $433,000. AT5- 2 Test Bank for Accounting Principles, Twelfth Edition b. $400,000. c. $425,000. d. $403,000. Achievement Test 5 AT5- 3 ____ 3. Windcrest purchased machinery for $105,000 that was expected to have a useful life of seven years with no salvage value, and was depreciated using the straight-line method. At the end of its fifth year of use, after recording depreciation expense, it was retired from service and given to a junk dealer. The entry to record the retirement includes a a. credit to Accumulated Depreciation—Machinery for $75,000. b. credit to Depreciation Expense for $15,000. c. debit to Machinery for $105,000. d. debit to Loss on Disposal of Plant Assets for $30,000. ____ 4. When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense a. decreases the amount customers owe the company. b. increases net income. c. decreases current assets. d. has no effect on current assets. ____ 5. When customers make purchases with a national credit card, the retailer a. is not involved in the collection process. b. is responsible for maintaining customer accounts. c. absorbs any losses from uncollectible accounts. d. receives cash equal to the full price of the merchandise sold from the credit card company. ____ 6. During 2017, Radia Corporation reported net sales of $1,800,000 and net income of $400,000. Radia also reported beginning total assets of $800,000 and ending total assets of $1,200,000. How much is Radia’s asset turnover? a. 1.5 times. b. 1.8 times. c. 2.25 times. d. .5 times. ____ 7. Allowance for Doubtful Accounts is presented as a (n) a. addition to Accounts Receivable on the balance sheet. b. operating expense on the income statement. c. contra asset on the balance sheet. d. deduction from Sales Revenue on the income statement. ____ 8. Which of the following methods and bases of accounting for uncollectible accounts receivable is inconsistent with the proper application of expense recognition? a. Percentage of sales basis. b. Direct write-off method. c. Aging of receivables allowance method. d. Percentage of receivables basis. a ____ 9. When recording exchanges of assets that have commercial substance, a. gains are treated as increases in the cost of the new asset. b. the gain or loss on the old asset is the difference between its cost and its fair value. c. both gains and losses are recognized immediately. d. losses are recorded as credits and gains are recorded as debits. AT5- 4 Test Bank for Accounting Principles, Twelfth Edition ____ 10. The cost of a patent should be amortized over a. 20 years. b. its useful life. c. the longer of its legal life or its useful life. d. the shorter of its legal life or its useful life. ____ 11. On June 30, 2017, Agent Products sold equipment with an original cost of $600,000 for $150,000. The equipment was purchased January 1, 2014, and was depreciated using the straight-line method assuming a four-year useful life and $60,000 salvage value. The necessary entries for 2017 include a a. debit to Accumulated Depreciation—Equipment for $135,000. b. debit to Loss on Sale of Plant Assets for $22,500. c. credit to Gain on Sale of Plant Assets for $22,500. d. credit to Accumulated Depreciation—Equipment for $202,500. ____ 12. The entry to record depletion expense a. decreases assets and liabilities. b. decreases net income and increases liabilities. c. decreases assets and increases liabilities. d. decreases owner's equity and assets. PART II—MATCHING (5 points) Instructions: Match the cash expenditures given below with the appropriate accounting treatment. An individual classification may be used more than once, or not at all. Treatments A. Record the expenditure as an asset and depreciate it. B. Record the expenditure as an asset and amortize it. C. Record the expenditure as an asset and deplete it. D. Record the expenditure as an asset but do not systematically allocate it to expense. E. Record the expenditure as an expense in the current period. F. None of the above is appropriate. Expenditures ____ 1. Acquired a piece of machinery for plant operations ____ 2. Purchased a producing copper mine ____ 3. Paid property taxes owed on land acquired ____ 4. Paid for an oil change to a vehicle ____ 5. Purchased a copyright from an author Achievement Test 5 AT5- 5 PART III — ACCOUNTS RECEIVABLE (18 points) 1. UNCOLLECTIBLE ACCOUNTS Instructions: Present the journal entries specified below; show supporting calculations. The trial balance of Harlem Company at December 31, 2016 includes the following: Debits Credits Accounts Receivable ............................................................................ $80,000 Allowance for Doubtful Accounts ....................................................... $ 3,000 Sales (all on credit) .............................................................................. 700,000 Sales Returns and Allowances ............................................................. 20,000 A. If Harlem uses the aging method and estimates that $5,000 of receivables will be uncollectible, prepare the adjusting entry. B. If Harlem estimates uncollectibles at 2% of net credit sales, prepare the appropriate adjusting entry. C. Assume that on February 10, 2017 the specific account of Jason Jones with a balance of $300 is deemed uncollectible. Record the write-off. D. Assume that on May 12, 2017, Jones pays his entire balance, previously written off in entry (C). Record the appropriate entries. AT5- 6 Test Bank for Accounting Principles, Twelfth Edition 2. SALE OF ACCOUNTS RECEIVABLE Instructions: Present the journal entries specified below. A. West Cycle sells $200,000 of accounts receivable to RT, Inc. for cash less a 4% service charge. Record the sale. B. Recognized MasterCard credit card sales totaling $6,000. A 3% service fee is charged by MasterCard. Record the sale on the books of West Cycle. PART IV — NOTES RECEIVABLE (10 points) Instructions: Prepare journal entries to record the following events, rounding to the nearest dollar if necessary: April 1 Annstar Company received a 7%, 6-month $50,000 note dated April 1 from a customer whose account balance was in default. Oct. 1 The note is honored and no interest had been accrued. Oct. 1 Assume instead that the note is dishonored by the customer and there is hope of future collection. Oct. 1 Assume instead that the note is dishonored and there is no hope of future collection. Achievement Test 5 AT5- 7 PART V — DEPRECIATION METHODS (13 points) Cryer’s Frozen Goods purchased a machine on January 1, 2016, at a total cost of $500,000. The machine has an estimated useful life of 5 years or 900,000 units of output and a salvage value of $50,000. Instructions: Complete the following table by presenting the annual depreciation expense for the years 2016 and 2017, under the indicated depreciation methods. Assume actual activity in terms of units of output was: 2016—50,000 units and 2017—80,000 units. ——————————————————————————————————————————— Annual Depreciation Expense 2016 2017 ——————————————————————————————————————————— Straight-Line: $ $ ——————————————————————————————————————————— (Supporting Computations) ——————————————————————————————————————————— Double-Declining-Balance: $ $ ——————————————————————————————————————————— (Supporting Computations) ——————————————————————————————————————————— Units-of-Activity: $ $ ——————————————————————————————————————————— (Supporting Computations) AT5- 8 Test Bank for Accounting Principles, Twelfth Edition PART VI — PLANT ASSETS: SHORT PROBLEMS (15 points) Instructions: Complete the requirements specified for each of the following independent situations. 1. Mellies Company purchased land and an office building on September 1 for a combined cash price of $2,200,000. The land had a cost of $1,300,000 and the building had a book value of $1,030,000 on the seller's books. The land and building had fair values of $1,400,000 and $800,000, respectively on September 1. Mellies made the following entry at acquisition: Land ....................................................................................................... 1,300,000 Buildings ................................................................................................. 1,700,000 Gain on Purchase .......................................................................... 130,000 Accumulated Depreciation – Buildings ........................................ 670,000 Cash ............................................................................................... 2,200,000 Prepare the correct entry for the acquisition. 2. Arvil Company bought machinery on January 1, 2014 at a cost of $400,000. The machinery had an estimated life of 8 years and salvage value of $20,000. In January 2017, Arvil estimates that the machinery will have a life of only 4 more years and an $18,000 salvage value. Arvil uses straight-line depreciation. Compute the revised annual depreciation for 2017. 3. Braden Company bought equipment on April 1, 2016 at a total cost of $220,000. The equipment has an estimated useful life of 4 years and salvage value of $40,000. Braden uses the double-declining- balance method of depreciation. Compute depreciation for 2016 and 2017. Achievement Test 5 AT5- 9 PART VII — ASSET PURCHASES AND DISPOSITIONS (15 points) a 1. Winder Construction gave up a used crane and $82,000 cash for a new crane. The old crane cost $210,000, had $84,000 of accumulated depreciation, and a fair value of $136,000. The exchange had commercial substance. In recording this exchange, for how much should the new crane be recorded? $_____________ a 2. Preston Builders gave up a used diesel-powered electric generator and $17,000 cash for a new truck. The generator cost $105,000, had $65,000 of accumulated depreciation, and a fair value of $40,000. The exchange had commercial substance. In recording this exchange, for how much should the new truck be recorded? $_____________ 3. Appleton Mining purchased a coal mine for $4,200,000. The mine was expected to produce 12,000,000 tons of coal over twenty years with no salvage value. During the first year, 800,000 tons of coal were mined and sold. How much is depletion for the first year? $_____________ 4. Salt Industries purchased equipment costing $100,000 on January 1, 2016. The equipment has a five- year useful life, $10,000 salvage value, and is being depreciated using the straight-line method. It was sold at an $8,000 gain on July 1, 2020. How much was the selling price of the equipment? $_____________ 5. Vystar Corporation incurred $380,000 of research and development costs to produce a high technology solar computer, paid filing fees of $15,000 to register a patent on this product, and paid $84,000 to successfully defend the patent against infringement by a competitor. All of these costs were incurred in late December 2016. Production of solar computers began on January 1, 2017. While the patent has a legal life of 20 years the company determines that the patent’s useful life is 15 years. How much is amortization expense for 2017? $_____________ AT5- 10 Test Bank for Accounting Principles, Twelfth Edition Solutions — Achievement Test 5: Chapters 9 and 10 PART I — MULTIPLE CHOICE (24 points) 1. d 4. c 7. c 10. d 2. a 5. a 8. b 11. c 3. d 6. b 9. c 12. d PART II — MATCHING (5 points) 1. A 2. C 3. D 4. E 5. B PART III — ACCOUNTS RECEIVABLE (18 points) 1. UNCOLLECTIBLE ACCOUNTS A. Bad Debts Expense ............................................................................. 2,000 Allowance for Doubtful Accounts ($5,000 - $3,000) .............. 2,000 B. Bad Debts Expense (2% × $680,000) ................................................. 13,600 Allowance for Doubtful Accounts........................................... 13,600 C. Allowance for Doubtful Accounts ..................................................... 300 Accounts Receivable .............................................................. 300 D. Accounts Receivable .......................................................................... 300 Allowance for Doubtful Accounts .......................................... 300 Cash ................................................................................................... 300 Accounts Receivable .............................................................. 300 2. SALE OF ACCOUNTS RECEIVABLE A. Cash .................................................................................................... 192,000 Service Charge Expense ..................................................................... 8,000 Accounts Receivable ............................................................... 200,000 B. Cash .................................................................................................... 5,820 Service Charge Expense ..................................................................... 180 Sales Revenue.......................................................................... 6,000 Achievement Test 5 AT5- 11 PART IV — NOTES RECEIVABLE (10 points) April 1 Notes Receivable ............................................................................... 50,000 Accounts Receivable................................................................ 50,000 Oct. 1 Cash ................................................................................................... 51,750 Notes Receivable ..................................................................... 50,000 Interest Revenue ...................................................................... 1,750 Oct. 1 Accounts Receivable ......................................................................... 51,750 Notes Receivable ..................................................................... 50,000 Interest Revenue ...................................................................... 1,750 Oct. 1 Allowance for Doubtful Accounts ..................................................... 50,000 Notes Receivable ..................................................................... 50,000 PART V — DEPRECIATION METHODS (13 points) 2016 2017 Straight-line [($500,000 – $50,000) ÷ 5] $90,000 $90,000 Double-declining-balance (20% × 2 = 40%) 2016 $500,000 × .40 $200,000 2017 ($500,000 – $200,000) × .40 $120,000 Units-of-activity ($500,000 – $50,000) ÷ 900,000 = $.50/unit 2016 50,000 × $.50 $25,000 2017 80,000 × $.50 $40,000 PART VI — PLANT ASSETS: SHORT PROBLEMS (15 points) 1. Land .................................................................................................. 1,400,000 Building ............................................................................................. 800,000 Cash ......................................................................................... 2,200,000 2. Revised annual depreciation Book value, 1/1/17 = ($400,000 – $142,500).................................................... $257,500 Less: New salvage value ................................................................................... 18,000 Depreciable cost ................................................................................................ $239,500 Remaining useful life ....................................................................................... 4 years Revised annual depreciation ($239,500 ÷ 4) .................................................... $59,875 3. 2016 depreciation: $220,000 × 0.50 × 9/12 = $82,500 2017 depreciation: ($220,000 – $82,500) × 0.50 = $68,750 PART VII — ASSET PURCHASES AND DISPOSITIONS (15 points) a 1. $218,000 3. $280,000 5. $6,600 a 2. $57,000 4. $27,000 AT5- 12 Test Bank for Accounting Principles, Twelfth Edition Completed download test bank (click to download): https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmel-kieso-test-bank/ Solutions manual for Accounting Principles, 12th Edition Weygandt Kimmel Kieso complete download: https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmel-kieso-solutions- manual/ Related download link: accounting principles 12th edition test bank pdf accounting principles 12th edition solutions accounting principles weygandt 11th edition pdf accounting principles 11th edition solutions principles of accounting needles 12th edition test bank accounting principles weygandt pdf accounting principles 12th edition solutions pdf accounting principles book pdf accounting principles 11th edition weygandt pdf free download sample
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