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(Solved) (Latest ver. Aug 2020) - Multiple Choice

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1- A company purchased land for $70,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at
a.$77,000.
b.$70,000.
c.$75,000.
d.$82,000.

2-A company purchased a delivery truck on January 1, 2005, for $18,000. It is estimated that the delivery truck will have a $4,000 salvage value at the end of its 5-year useful life. If the company recorded depreciation expense of $2,800 for the year 2006 on the delivery truck, the depreciation method used by the company is
a.not determinable.
b.the straight-line method.
c.the units-of-activity method.
d.the double-declining-balance method.
3- Anne Company has total cash register receipts of $6,825. This total includes a 5% sales tax. The entry to record the receipts will include a
a.debit to Sales Tax Expense for $325.
b.credit to Sales for $6,000.
c.credit to Sales Taxes Payable for $825.
d.credit to Sales Taxes Payable for $325.
4-$200,000, 5%, 20-year bond was issued at 99. The proceeds received from the bond issuance are
a.$200,000.
b.$198,000.
c.$204,000.
d.$196,000.
5- A corporation issued $600,000 of 6%, 5-year bonds on January 1, at 102. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization, the amount of bond interest expense to be recognized on July 1 is
a.$36,000.
b.$18,000.
c.$19,200.
d.$16,800.

 







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