Accounting Principles 12th Edition Weygandt Kimmel Kieso Test Bank Solutions

Test Bank Solutions Accounting Principles 12th Edition Weygandt Kimmel Kieso Test Bank All Chapters, Achievement Test,Comprehensive Examination, Final Exam Are Included, Download: https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmelkieso-test-bank/ Solutions Manual For Accounting Principles, 12th Edition Weygandt Kimmel Kieso Complete Download: https://testbankarea.com/download/accounting-principles-12th-edition-weygandt-kimmelkieso-solutions-manual/

Name __________________________ _____________________________ ___ Instructor __________________________ Section # __________ Date ___________

Achievement Test 5: Chapters 9 and 10  Accounting Principles, 12e Weygandt, Kimmel, & Kieso

Part Points

I

II

III

IV

V

VI

VII

Total

24

5

18

10

13

15

15

100

Score

PART I —  MULTIPLE  MULTIPLE CHOICE (24 points) e ach of the following questions. Instructions: Designate the best answer for each  ____

1.

Randall Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Randall's new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new  building, and $55,000 was paid for a parking lot and necessary walkways and driveways. For how much should the new office building be recorded? a. $1,662,000.  b. $1,680,000. c. $1,684,000. d. $1,629,000.

 ____

2.

Randall Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Randall’ s new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new  building, and $55,000 was paid for a parking lot and necessary walkways and driveways. For how much should the land be recorded? a. $433,000.

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 b. $400,000. c. $425,000. d. $403,000.

Achievement Test 5

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 ____

3.

Windcrest purchased machinery for $105,000 that was expected to have a useful life of seven years with no salvage value, and was depreciated using the straight-line method. At the end of its fifth year of use, after recording depreciation expense, it was retired from service and given to a junk dealer. The entry to record the retirement includes a a. credit to Accumulated Depreciation — Machinery Machinery for $75,000.  b. credit to Depreciation Expense Expense for $15,000. c. debit to Machinery for $105,000. d. debit to Loss on Disposal of Plant Assets for $30,000.

 ____

4.

When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense a. decreases the amount customers owe the company.  b. increases net income. c. decreases current assets. d. has no effect on current assets.

 ____

5. When customers make purchases with with a national credit card, the retailer retailer a. is not involved in the collection process.  b. is responsible for maintaining customer accounts. c. absorbs any losses from uncollectible accounts. d. receives cash equal to the full price price of the merchandise sold from the credit credit card company. company.

 ____

6. During 2017, Radia Corporation Corporation reported net sales of $1,800,000 $1,800,000 and net income of $400,000. Radia also reported beginning total assets of $800,000 and ending total assets of $1,200,000. How much is Radia’s asset turnover? a. 1.5 times.  b. 1.8 times. c. 2.25 times. d. .5 times.

 ____

7.

Allowance for Doubtful Accounts Accounts is presented as a (n) a. addition to Accounts Accounts Receivable on the the balance balance sheet.  b. operating expense on the the income statement. c. contra asset on the balance sheet. d. deduction from Sales Revenue Revenue on the income income statement. statement.

 ____

8.

Which of the following methods and bases of accounting for uncollectible accounts receivable is inconsistent with the proper application of expense recognition? a. Percentage of sales basis.  b. Direct write-off method. c. Aging of receivables allowance method. d. Percentage of receivables basis.

 ____

a

9.

When recording exchanges of assets assets that have commercial substance, a. gains are treated as increases in the cost of the new asset.  b. the gain or loss on the old old asset is the difference between between its cost and its fair value. value. c. both gains and losses are recognized immediately. d. losses are recorded as credits and gains are recorded as debits.

AT5- 4

Test Bank for Accounting Principles, Twelfth Edition

 ____ 10.

The cost of a patent should should be amortized over a. 20 years.  b. its useful life. c. the longer longer of its legal life life or its useful useful life. d. the shorter shorter of its legal legal life or its useful life.

 ____ 11.

On June 30, 2017, Agent Products sold equipment with an original cost of $600,000 for $150,000. The equipment was purchased January 1, 2014, and was depreciated using the straight-line method assuming a four-year useful life and $60,000 salvage value. The necessary entries for 2017 include a a. debit to Accumulated Depreciation — Equipment Equipment for $135,000.  b. debit to Loss on Sale of Plant Plant Assets for $22,500. c. credit to Gain on Sale of Plant Assets for $22,500. $22,500. d. credit to Accumulated Depreciation — Equipment Equipment for $202,500.

 ____

12. The entry to record depletion depletion expense a. decreases assets and liabilities.  b. decreases net income and increases increases liabilities. c. decreases assets and increases liabilities. d. decreases owner's equity and assets.

PART II —  MATCHING (5 points)  — MATCHING Instructions:  Match the cash expenditures given below with the appropriate accounting treatment. An individual classification classification may be used more than once, or not at all. Treatments A. Record the expenditure as an asset and depreciate it. B. Record the expenditure as an asset and amortize it. C. Record the expenditure as an asset and deplete it. D. Record the expenditure expenditure as an asset asset but but do not systematically allocate it it to expense. E. Record the expenditure as an expense in the current period. F. None of the above is appropriate.  Expenditures  Expenditures

 ____

1.

Acquired a piece of machinery for plant plant operations

 ____

2.

Purchased a producing copper copper mine

 ____

3.

Paid property taxes owed on land land acquired

 ____

4.

Paid for an oil change to a vehicle vehicle

 ____

5.

Purchased a copyright from an author author

Achievement Test 5

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PART III —  ACCOUNTS  ACCOUNTS RECEIVABLE (18 points) 1.

UNCOLLECTIBLE ACCOUNTS

Instructions: Present the journal entries specified below; show supporting calculations.

The trial balance of Harlem Company at December 31, 2016 includes the following: Debits Accounts Receivable .................................. ................. ................................... ................................... ........................ ....... $80,000 Allowance for Doubtful Accounts .................................. ................ ................................... ..................... .... Sales (all on credit) .................................. ................ ................................... .................................. ........................... .......... Sales Returns and Allowances .................................. ................. .................................. ........................... .......... 20,000

Credits $ 3,000 700,000

A.

If Harlem uses the aging method method and estimates that that $5,000 of receivables receivables will be uncollectible, uncollectible,  prepare the adjusting entry. entry.

B.

If Harlem estimates uncollectibles uncollectibles at 2% of net credit sales, sales, prepare prepare the appropriate adjusting entry.

C.

Assume that on February 10, 2017 the specific account of Jason Jones with a balance of $300 is deemed uncollectible. Record the write-off.

D.

Assume that on May 12, 2017, Jones pays his entire balance, previously previously written off in entry (C). Record the appropriate entries.

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2.

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SALE OF ACCOUNTS RECEIVABLE

Instructions: Present the journal entries specified below.

A.

West Cycle sells $200,000 $200,000 of accounts receivable receivable to RT, Inc. for cash less a 4% service service charge. Record the sale.

B.

Recognized MasterCard credit credit card sales totaling $6,000. A 3% 3% service fee is charged by MasterCard. Record the sale on the books of West Cycle.

PART IV —  NOTES  NOTES RECEIVABLE (10 points) r ecord the following events, rounding to the nearest dollar if Instructions: Prepare journal entries to record necessary: April 1

Annstar Company received a 7%, 6-month $50,000 note dated April 1 from a customer whose account balance was in default.

Oct.

1

The note is honored and no interest had been accrued.

Oct.

1

Assume instead that the note is dishonored by the customer and there is hope of future collection.

Oct.

1

Assume instead that the note is dishonored and there is no hope of future collection.

Achievement Test 5

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PART V —  DEPRECIATION  DEPRECIATION METHODS (13 points) Cryer’s Frozen Goods  purchased a machine on January 1, 2016, at a total cost of $500,000. $ 500,000. The machine has an estimated useful life of 5 years or 900,000 units of output and a salvage value of $50,000. Instructions:  Complete the following table by presenting the annual depreciation expense for the years 2016 and 2017, under the indicated depreciation methods. Assume actual activity in terms of units of output was: 2016 — 50,000 50,000 units and 2017 — 80,000 80,000 units.

 —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  Annual Depreciation Expense 2016 2017  —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  Straight-Line: $ $  —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  (Supporting Computations)

 —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  Double-Declining-Balance: Double-Declining-Balance: $ $  —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  (Supporting Computations)

 —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  Units-of-Activity: Units-of-Activity: $ $  —————————————  ———————————————————— ————————————— ————————————— —————————————— ——————————  ———  (Supporting Computations)

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Test Bank for Accounting Principles, Twelfth Edition

PART VI —  PLANT  PLANT ASSETS: SHORT PROBLEMS (15 points) Instructions: Complete the requirements specified for each of the following independent situations.

1.

Mellies Company purchased land and an office office building building on September 1 for a combined combined cash price of $2,200,000. The land had a cost of $1,300,000 and the building had a book value of $1,030,000 on the seller's books. The land and building had fair values of $1,400,000 and $800,000, respectively on September 1. Mellies made the following entry at acquisition: Land ................................... .................. ................................... ................................... ................................... ................................. ............... 1,300,000 Buildings ................................... .................. ................................... ................................... ................................... ........................... ......... 1,700,000 Gain on Purchase ................................... .................. ................................... ................................... ..................... .... Accumulated Depreciation  – Buildings ................................. ................ ........................ ....... Cash ................................. ................ ................................... ................................... ................................... ........................... .........

130,000 670,000 2,200,000

Prepare the correct entry for the acquisition.

2.

Arvil Company bought machinery on January 1, 2014 at a cost of $400,000. $400,000. The machinery machinery had had an estimated life of 8 years and salvage value of $20,000. In January 2017, Arvil estimates that the machinery will have a life of only 4 more years and an $18,000 salvage value. Arvil uses straight-line depreciation. Compute the revised annual depreciation for 2017.

3.

Braden Company Company bought bought equipment on April 1, 2016 at a total cost of of $220,000. $220,000. The equipment has an estimated useful life of 4 years and salvage value of $40,000. Braden uses the double-declining balance method of depreciation. depreciation. Compute depreciation for 2016 2016 and 2017.

Achievement Test 5

AT5- 9

PART VII —  ASSET  ASSET PURCHASES AND DISPOSITIONS (15 points) a

1. Winder Construction gave gave up a used crane and $82,000 cash for a new crane. The old crane cost $210,000, had $84,000 of accumulated depreciation, and a fair value of $136,000. The exchange had commercial substance. In recording this exchange, for how much should the new crane be recorded? $_____________

a

2. Preston Builders gave up a used diesel-powered diesel-powered electric generator and $17,000 cash for a new truck. The generator cost $105,000, had $65,000 of accumulated depreciation, and a fair value of $40,000. The exchange had commercial substance. In recording this exchange, for how much should the new truck be recorded? $_____________

3. Appleton Mining Mining purchased a coal mine for $4,200,000. $4,200,000. The mine was expected to produce 12,000,000 tons of coal over twenty years with no salvage value. During the first year, 800,000 tons of coal were mined and sold. How much is depletion for the first year? $_____________

4. Salt Industries purchased equipment equipment costing $100,000 on January 1, 2016. The equipment has has a fiveyear useful life, $10,000 salvage value, and is being depreciated using the straight-line method. It was sold at an $8,000 gain on July 1, 2020. How much was the selling price of the equipment? $_____________

5. Vystar Corporation Corporation incurred $380,000 of research and development costs to produce a high high technology technology solar computer, paid filing fees of $15,000 to register a patent on this product, and paid $84,000 to successfully defend the patent against infringement by a competitor. All of these costs were incurred in late December 2016. Production of solar computers began on January 1, 2017. While the patent has a legal life of 20 years the company determines that the patent’s useful life is 15   years. How much is amortization expense for 2017? $_____________

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Test Bank for Accounting Principles, Twelfth Edition

Solutions  —  Achievement  Achievement Test 5: Chapters 9 and 10

PART I —  MULTIPLE  MULTIPLE CHOICE (24 points) 1. d 2. a 3. d

4. 5. 6.

c a b

7. 8. 9.

c b c

10. 11. 12.

d c d

PART II —  MATCHING  MATCHING (5 points) 1. A

2. C

3. D

4. E

5. B

PART III —  ACCOUNTS  ACCOUNTS RECEIVABLE (18 points) 1. UNCOLLECTIBLE ACCOUNTS A. Bad Debts Expense ................................. ................ .................................. ................................... ........................... ......... Allowance for Doubtful Accounts ($5,000 - $3,000).............. B.

C.

D.

2,000 2,000

Bad Debts Expense (2% × $680,000) .................................. ................ ................................. ............... Allowance for Doubtful Accounts.................................. ................ ........................... .........

13,600

Allowance for Doubtful Accounts ................................... ................. ................................... ................... Accounts Receivable ................................... .................. ................................... ........................... .........

300

Accounts Receivable ................................... .................. ................................... ................................... ..................... .... Allowance for Doubtful Accounts ................................. ............... ........................... .........

300

13,600

300

300

Cash ........................................ ....................... ................................... ................................... ................................... ........................ ...... 300 Accounts Receivable ................................... .................. ................................... ........................... ......... 2. SALE OF ACCOUNTS RECEIVABLE A. Cash ................................... .................. ................................... ................................... ................................... .............................. ............ Service Charge Expense ................................. ................ ................................... ................................... ................... Accounts Receivable ................................. ................ ................................... .............................. ............ B.

Cash ................................... .................. ................................... ................................... ................................... .............................. ............ Service Charge Expense ................................. ................ ................................... ................................... ................... Sales Revenue................................... .................. ................................... ................................... ..................... ....

300

192,000 8,000 200,000 5,820 180 6,000

Achievement Test 5

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PART IV —  NOTES  NOTES RECEIVABLE (10 points) April 1 Notes Receivable ................................... ................. ................................... .................................. ........................... .......... Accounts Receivable.................................. ................. ................................... .............................. ............

50,000

Oct.

1 Cash .................................. ................. ................................... ................................... ................................... .............................. ............  Notes Receivable ................................. ................ ................................... ................................... ................... Interest Revenue .................................. ................. ................................... ................................... ...................

51,750

1 Accounts Receivable .................................. ................. ................................... ................................... ..................... ....  Notes Receivable ................................. ................ ................................... ................................... ................... Interest Revenue .................................. ................. ................................... ................................... ...................

51,750

1 Allowance for Doubtful Accounts................................... ................. ................................... ...................  Notes Receivable ................................. ................ ................................... ................................... ...................

50,000

Oct.

Oct.

50,000

50,000 1,750

50,000 1,750

50,000

PART V —  DEPRECIATION  DEPRECIATION METHODS (13 points) 2016 $90,000

Straight-line [($500,000  – $50,000) ÷ 5] Double-declining-balance Double-declining-balance (20% × 2 = 40%) 2016 $500,000 × .40 2017 ($500,000  – $200,000) × .40

2017 $90,000

$200,000 $120,000

Units-of-activity ($500,000  –  $50,000)  $50,000) ÷ 900,000 = $.50/unit 2016 50,000 × $.50 2017 80,000 × $.50

$25,000 $40,000

PART VI —  PLANT  PLANT ASSETS: SHORT PROBLEMS (15 points) 1.

2.

3.

Land .................................. ................. ................................... ................................... ................................... ............................. ........... Building................................... .................. ................................... ................................... ................................... ....................... ..... Cash .................................. ................. ................................... ................................... .................................. .................... ...

a

2,200,000

Revised annual depreciation Book value, 1/1/17 = ($400,000  – $142,500)................................... .................. .................................. ................. Less: New salvage value .................................. ................. ................................... ................................... ............................... .............. Depreciable cost ................................... .................. ................................... ................................... ................................... .......................... ........

$257,500 18,000 $239,500

Remaining useful life ................................... .................. ................................... ................................... .................................. .................

4 years

Revised annual depreciation ($239,500 ÷ 4) ................................... .................. .................................. .................

$59,875

2016 depreciation: $220,000 × 0.50 × 9/12 =

$82,500

2017 depreciation: ($220,000  – $82,500) × 0.50 =

$68,750

PART VII —  ASSET  ASSET PURCHASES AND DISPOSITIONS (15 points) a

1,400,000 800,000

1. $218,000 2. $57,000

3. $280,000 4. $27,000

5. $6,600

AT5- 12

Test Bank for Accounting Principles, Twelfth Edition

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