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$30,100
$29,400
$28,700
$30,800
4. (TCOs B, E) A small and private company may be able to justify
using a cash basis of accounting if it has _____. (Points : 5)
sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account
5. (TCO D) In a period of increasing prices, which inventory cost flow
assumption will result in the lowest amount of income tax expense?
(Points : 5)
FIFO
LIFO
The average cost method
Income tax expense for the period will be the same under all
assumptions.
6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges
amounted to $2,800 and there was a cost of $8,000 for building a
foundation and installing the equipment. It is estimated that the
equipment will have a $12,000 salv age value at the end of its 5-year
useful life. Depreciation expense each year using the straight-line
method will be _____. (Points : 5)
$14,160
$11,760
$9,840
$9,600
7. (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000
bonds dated January 1, 2007, at 96. The journal entry to record the
issuance will show a _____. (Points : 5)
debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000