AIS100_Practice_Exam_2 - 1 AIS 100 PRACTICE EXAM 2 I...

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1 AIS 100 PRACTICE EXAM 2 I. Multiple Choice (50 points) 1. The book value of a plant asset is the difference between the a) Cost of the asset and the yearly depreciation expense b) Replacement cost of the asset and its historical cost c) Proceeds received from the sale of the asset and its original cost d) Purchase price of the asset and the sum of the yearly depreciation to date 2. N/A 3. If a company fails to record the adjusting entry for estimated uncollectible accounts receivable at the end of the year, 4. A company writes a check for $167 but incorrectly records the amount in its ledger as $176. On the bank reconciliation, the error should be 5. N/A 6. Meghan Macramé Company incurred $300,000 of research and development costs in its laboratory to develop a new macramé weaver. The company spent $40,000 in legal fees for a patent granted on January 2, 2007. On July 31, 2007, Meghan Macramé paid $30,000 for legal fees in a successful defense of the patent. Assuming the company doesn’t adjust for amortization until the end of the calendar year, what is the total amount that should be debited to Patents through July 31, 2007? 7. N/A 8. A corporation issues $100,000, 10%, 5-year bonds on January 1, 2007, for $95,800. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond discount, the amount of bond interest expense to be recognized in December 31, 2007’s adjusting entry is a) $10,000 b) $840 c) $9,160 d) $10,840 9. The financial statements of the Bolton Manufacturing Company reports net credit sales of $500,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the receivables turnover ratio for Bolton?
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2 10. The financial statements of the ABC Company reports net credit sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?
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  • Spring '08
  • Punke
  • Depreciation, XYZ Company, net credit sales, Heyerdahl

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