3 DOC INT ACCT QUIZ 1

3 DOC INT ACCT QUIZ 1 - The premium expense for 2010 is...

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1. Question: (TCO D) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2010. Historically, 10% of customers mail in the rebate form. During 2010, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2010 financial statements dated December 31? Your Answer: $400,000; $400,000 $400,000; $260,000 CORRECT $260,000; $260,000 $140,000; $260,000 Instructor Explanation: 4,000,000 X .10 X $1 = $400,000; $400,000 – $140,000 = $260,000. Chapter 13. Points Received: 4 of 4 2. Question: (TCO D) Mott Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Mott $2.00 each. Mott estimates that 40 percent of the coupons will be redeemed. Data for 2010 and 2011 are as follows:
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Unformatted text preview: The premium expense for 2010 is Your Answer: $25,000. $30,000. $35,000. $50,000. CORRECT Instructor Explanation: [(500,000 X .4) 8] X $2 = $50,000. Chapter 13. Points Received: 4 of 4 3. Question: (TCO D) On September 1, 2010, Herman Co. issued a note payable to National Bank in the amount of $1,200,000, bearing interest at 12% and payable in three equal annual principal payments of $400,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2011. At December 31, 2011, Herman should record accrued interest payable of Your Answer: $48,000. $44,000. $32,000. CORRECT ANSWER $29,334. Instructor Explanation: $800,000 x .12 x 4/12=$32,000. Chapter 13. Points Received: 0 of 4 4. Question: : 4 of 4...
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3 DOC INT ACCT QUIZ 1 - The premium expense for 2010 is...

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