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9. Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is: a. $5,000. b. $55,000. c. $60,000. d. $65,000

9. Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is: a. $5,000. b. $55,000. c. $60,000. d. $65,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I Only Want the Correct Option of these MCQs can u please help me to find the answer.

16. If the assets of a company increase by $100,000 during the year and its liabilities increase by $35,000 during the same year, then the change in equity of the company during the year must have been: a. An increase of $135,000. b. A decrease of $135,000. c. A decrease of $65,000. d. An increase of $65,000. e. An increase of $100,000. 17. Schopenhauer Company exchanged an old machine, with a book value of $39,000 and a fair value of $35,000, and paid $10,000 cash for a similar new machine. The transaction has commercial substance. At what amount should the machine acquired in the exchange be recorded on Schopenhauer's books? a. $45,000. b. $46,000. c. $49,000. d. $50,000. 18. On May 1, 2015, a two-year insurance policy was purchased for $24,000 with coverage to begin immediately. What is the amount of insurance expense that appears on the company's income statement for the year ended December 31, 2015? a. $4,000 b. $8,000 c. $12,000 d. $20,000 e. $24,000 19. Karim issued an invoice, a credit note and a receipt. What has happened? a. Karim purchased goods and paid the supplier immediately. b. Karim purchased goods on credit, made returns to the supplier and paid the balance due. c. Karim sold goods and received immediate payment from the customer. c. Karim sold goods on credit, received returns from the customer and received the balance due. 20. Which error will be revealed by the preparation of a trial balance? а. an amount recorded twice as a debit entry b. a capital expenditure item treated as revenue expenditure a double entry made using an incorrect amount d. a transaction completely omitted from the books с. 5
Transcribed Image Text:16. If the assets of a company increase by $100,000 during the year and its liabilities increase by $35,000 during the same year, then the change in equity of the company during the year must have been: a. An increase of $135,000. b. A decrease of $135,000. c. A decrease of $65,000. d. An increase of $65,000. e. An increase of $100,000. 17. Schopenhauer Company exchanged an old machine, with a book value of $39,000 and a fair value of $35,000, and paid $10,000 cash for a similar new machine. The transaction has commercial substance. At what amount should the machine acquired in the exchange be recorded on Schopenhauer's books? a. $45,000. b. $46,000. c. $49,000. d. $50,000. 18. On May 1, 2015, a two-year insurance policy was purchased for $24,000 with coverage to begin immediately. What is the amount of insurance expense that appears on the company's income statement for the year ended December 31, 2015? a. $4,000 b. $8,000 c. $12,000 d. $20,000 e. $24,000 19. Karim issued an invoice, a credit note and a receipt. What has happened? a. Karim purchased goods and paid the supplier immediately. b. Karim purchased goods on credit, made returns to the supplier and paid the balance due. c. Karim sold goods and received immediate payment from the customer. c. Karim sold goods on credit, received returns from the customer and received the balance due. 20. Which error will be revealed by the preparation of a trial balance? а. an amount recorded twice as a debit entry b. a capital expenditure item treated as revenue expenditure a double entry made using an incorrect amount d. a transaction completely omitted from the books с. 5
9. Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is: a. $5,000. b. $55,000. c. $60,000. d. $65,000 10. Net sales for the month are $800,000, and bad debts are expected to be 1.5% of net sales. The company uses the percentage-of-sales basis. If Allowance for Doubtful Accounts has a credit balance of $15,000 before adjustment, what is the balance after adjustment? a. $15,000 b. $27,000 c. $23,000 d. $31,000 11. One of the following statements about promissory notes is incorrect. The incorrect statement is: a. The party making the promise to pay is called the maker. b. The party to whom payment is to be made is called the payee. c. A promissory note is not a negotiable instrument. d. A promissory note is often required from high-risk customers. 12. Depreciation is a process of: a. valuation. b. cost allocation. c. cash accumulation. d. appraisal. 13. Jefferson Company purchased a piece of equipment on January 1, 2012. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the asset for 2013 under the double-declining-balance method? a. $6,500 b. $11,250 c. $15,000. d. $6,562. 14. Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2012. The machine was purchased for $80,000 on January 1, 2008, and was depreciated on a straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale? a. $18,000. b. $54,000 c. $22,000 d. $46,000 15. Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. If no salvage value is expected and 2 million tons are mined and sold in the first year, the entry to record depletion will include a: a. debit to Accumulated Depletion of $2,000,000. b. credit to Depletion Expense of $1,200,000. c. debit to Depletion Expense of $1,200,000. d. credit to Accumulated Depletion of $2,000,000. 4
Transcribed Image Text:9. Hughes Company has a credit balance of $5,000 in its Allowance for Doubtful Accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, Hughes estimates that $60,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is: a. $5,000. b. $55,000. c. $60,000. d. $65,000 10. Net sales for the month are $800,000, and bad debts are expected to be 1.5% of net sales. The company uses the percentage-of-sales basis. If Allowance for Doubtful Accounts has a credit balance of $15,000 before adjustment, what is the balance after adjustment? a. $15,000 b. $27,000 c. $23,000 d. $31,000 11. One of the following statements about promissory notes is incorrect. The incorrect statement is: a. The party making the promise to pay is called the maker. b. The party to whom payment is to be made is called the payee. c. A promissory note is not a negotiable instrument. d. A promissory note is often required from high-risk customers. 12. Depreciation is a process of: a. valuation. b. cost allocation. c. cash accumulation. d. appraisal. 13. Jefferson Company purchased a piece of equipment on January 1, 2012. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the asset for 2013 under the double-declining-balance method? a. $6,500 b. $11,250 c. $15,000. d. $6,562. 14. Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2012. The machine was purchased for $80,000 on January 1, 2008, and was depreciated on a straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale? a. $18,000. b. $54,000 c. $22,000 d. $46,000 15. Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. If no salvage value is expected and 2 million tons are mined and sold in the first year, the entry to record depletion will include a: a. debit to Accumulated Depletion of $2,000,000. b. credit to Depletion Expense of $1,200,000. c. debit to Depletion Expense of $1,200,000. d. credit to Accumulated Depletion of $2,000,000. 4
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