長庚大學工商管理系

會計學第一次期中考試題(2021)

學號_______________ 姓名____________________

B1. Interest is usually associated with

a. accounts receivable.
b. notes receivable.
c. doubtful accounts.
d. bad debts.

B2. Caps On Company manufactures sporting goods and clothing. Caps On

sold merchandise to Pro Sports Company on June 5, 2020 for $3,000,
terms 2/10, n/30. On June 9, 2020 Pro Sports returns merchandise worth
$200 to Caps On. On June 14, 2020 Caps On receives payment in full
from Pro Sports. Which of the following is true regarding the transaction
on June 14, 2020?
a. Caps On receives $2,800 from Pro Sports.
b. Caps On receives $2,744 from Pro Sports.
c. Pro Sports will pay $2,940 to Caps On.
d. All of these answer choices are correct.

C3. Three accounting issues associated with accounts receivable are

a. depreciating, returns, and valuing.
b. depreciating, valuing, and collecting.
c. recognizing, valuing, and disposing.
d. accrual, bad debts, and disposing.

B4. A customer charges a treadmill at Mike's Sport Shop. The price is €800
and the financing charge is 9% per annum if the bill is not paid in 30 days.
The customer fails to pay the bill within 30 days and a finance charge is
added to the customer's account.
What is the amount of the finance charge?
a. €24
b. €6
c. €72
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 d. €2

D5. A customer charges a treadmill at Mike's Sport Shop. The price is €2,000
and the financing charge is 9% per annum if the bill is not paid in 30 days.
The customer fails to pay the bill within 30 days and a finance charge is
added to the customer's account.

The accounts affected by the journal entry made by Mike's Sport Shop
to record the finance charge are
a. Accounts Receivable
Cash
b. Cash
Finance Receivable
c. Accounts Receivable
Interest Payable
d. Accounts Receivable
Interest Revenue

A6. Under the allowance method, writing off an uncollectible account

a. affects only statement of financial position accounts.
b. affects both statement of financial position and income statement accounts.
c. affects only income statement accounts.
d. is not acceptable practice.

B7. The existing balance in Allowance for Doubtful Accounts is considered

in computing bad debts expense in the
a. direct write-off method.
b. percentage of receivables basis.
c. percentage of receivables and direct write-off method.
d. None of these choices are correct.

A8. Cash realizable value is the difference between the

a. account receivable balance and the allowance account balance.
b. Net sales and the allowance account balance.
c. accounts receivable balance and bad debt expense.
d. Net sales and bad debt expense.

B9. When the allowance method of accounting for uncollectible accounts is

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 used, Bad Debts Expense is recorded
a. in the year after the credit sale is made.
b. in the same year as the credit sale.
c. as each credit sale is made.
d. when an account is written off as uncollectible.

C10. The direct write-off method of accounting for bad debts

a. uses an allowance account.
b. uses a contra-asset account.
c. does not require estimates of bad debt losses.
d. is the preferred method under IFRS.

C11. In 2020, Garrison Company had net credit sales of $2,250,000. On

January 1, 2020, Allowance for Doubtful Accounts had a credit balance
of $54,000. During 2020, $90,000 of uncollectible accounts receivable
were written off. Past experience indicates that the allowance should be
10% of the balance in receivables (percentage of receivables basis). If
the accounts receivable balance at December 31 was $700,000, what is
the required adjustment to the Allowance for Doubtful Accounts at
December 31, 2020?
a. $60,000
b. $225,000
c. $106,000
d. $90,000

B12. During 2020, Hitchcock Inc. had sales on account of $528,000, cash
sales of $216,000, and collections on account of $336,000. In addition,
they collected $5,850 which had been written off as uncollectible in 2019.
As a result of these transactions, the change in the accounts receivable
balance indicates a
a. $402,150 increase.
b. $192,000 increase.
c. $186,150 increase.
d. $408,000 increase.

C13. Which of the following methods is not acceptable for financial reporting
purposes?
a. Percentage of sales (emphasis on income statement).

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 b. Percentage of receivables (emphasis on statement of financial position).
c. Direct write-off.
d. All of these answer choices are acceptable.

D14. Oliver Furniture factors $800,000 of receivables to Kwik Factors, Inc.

Kwik Factors assesses a 2% service charge on the amount of
receivables sold. Oliver Furniture factors its receivables regularly with
Kwik Factors. What journal entry does Oliver make when factoring these
receivables?
a. Cash.......................................................................... 784,000
Loss on Sale of Receivables.................................... 16,000
Accounts Receivable .......................................
800,000
b. Cash.......................................................................... 784,000
Accounts Receivable .......................................
784,000
c. Cash.......................................................................... 800,000
Accounts Receivable .......................................
784,000
Gain on Sale of Receivables ...........................
16,000
d. Cash.......................................................................... 784,000
Service Charge Expense ......................................... 16,000
Accounts Receivable .......................................
800,000

D15. Assuming a 360-day year, the maturity value of a ¥1,500,000, 10%, 60-
day note receivable dated July 3 is
a. ¥1,500,000.
b. ¥1,650,000.
c. ¥1,515,000.
d. ¥1,525,000.

D16. Parks Company receives a $25,000, 3-month, 8% promissory note from

Todd Company in settlement of an open accounts receivable. What entry
will Parks Company make upon receiving the note?

a. Notes Receivable ..................................................... 25,500

Accounts Receivable—Todd Company ...........
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 25,500

b. Notes Receivable ..................................................... 25,500

Accounts Receivable—Todd Company ...........
25,000
Interest Revenue .............................................. 500

c. Notes Receivable ..................................................... 25,000

Interest Receivable .......................................... 500
Accounts Receivable—Todd Company ...........
25,000
Interest Revenue .............................................. 500

d. Notes Receivable ..................................................... 25,000

Accounts Receivable—Todd Company ...........
25,000

D17. The cost of a purchased building includes all of the following except
a. closing costs.
b. real estate broker’s commission.
c. remodeling costs.
d. All of these answer choices are correct.

C18. Which of the following assets does not decline in service potential over
the course of its useful life?
a. Equipment
b. Furnishings
c. Land
d. Fixtures

A19. The four subdivisions for plant assets are

a. land, land improvements, buildings, and equipment.
b. intangibles, land, buildings, and equipment.
c. furnishings and fixtures, land, buildings, and equipment.
d. property, plant, equipment, and land.

A20. Chicago Furniture uses a variety of equipment in its manufacturing

facility. On Chicago Furniture’s statement of financial position, the
“Equipment” account balance would include all of the following costs
except

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 a. motor vehicle licenses on delivery trucks.
b. installation costs on new equipment.
c. sales taxes paid on new delivery truck.
d. insurance during transit on new equipment.

C21. Depreciation is a process of

a. asset devaluation.
b. cost accumulation.
c. cost allocation.
d. asset valuation.

C22. Useful life is expressed in terms of units of activity, or units of output

expected from the asset under the
a. declining-balance method.
b. straight-line method.
c. units-of-activity method.
d. none of these answer choices are correct.

C23. Management should select the depreciation method that

a. is easiest to apply.
b. best measures the plant asset’s fair value over its useful life.
c. best measures the plant asset’s contribution to revenue over its useful life.
d. has been used most often in the past by the company.

D24. A plant asset was purchased on January 1 for $180,000 with an

estimated residual value of $30,000 at the end of its useful life. The
current year’s Depreciation Expense is $15,000 calculated on the
straight-line basis and the balance of the Accumulated Depreciation
account at the end of the year is $90,000. The remaining useful life of
the plant asset is
a. 10 years.
b. 8 years.
c. 6 years.
d. 4 years.

A25. Tomko Company purchased machinery with a list price of $160,000. They were
given a 10% discount by the manufacturer. They paid $1,000 for shipping and

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 sales tax of $7,500. Tomko estimates that the machinery will have a useful life
of 10 years and a residual value of $50,000. If Tomko uses straight-line
depreciation, annual depreciation will be
a. $10,250.
b. $10,180.
c. $15,250.
d. $9,400.

A26. On May 1, 2020, Pinkley Company sells office furniture for €80,000 cash. The
office furniture originally cost €200,000 when purchased on January 1, 2013.
Depreciation is recorded by the straight-line method over 10 years with a
residual value of €20,000. What depreciation expense should be recorded on
this asset in 2020?
a. €6,000.
b. €6,667.
c. €9,000.
d. €18,000.

C27. Which of the following statements is true regarding depreciation?

a. External auditors select the method believed to be most appropriate and
consistent with other companies in the same industry.
b. The income statement is impacted by depreciation through the
accumulated depreciation account, and the statement of financial position
is impacted by depreciation expense.
c. Once a company chooses a depreciation method, it should apply the same
method consistently over the entire useful life of the asset.
d. All of these answer choices are correct.

A28. Nicholson Company purchased equipment on January 1, 2019, for

€120,000 with an estimated residual value of €30,000 and estimated
useful life of 8 years. On January 1, 2021, Nicholson decided the
equipment will last 12 years from the date of purchase. The residual
value is still estimated at €30,000. Using the straight-line method the new
annual depreciation will be:
a. €6,750.
b. €7,500.
c. €9,000.
d. €10,000.

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B29. Each of the following is used in computing revised annual depreciation
for a change in estimate except
a. book value.
b. fair value.
c. depreciable cost.
d. remaining useful life.

C30. When a company sells an asset at a gain, which of the following is true?
a. Proceeds from the sale exceeded the historical cost of the asset on the
statement of financial position.
b. Proceeds from the sale were less than the book value of the asset on the
statement of financial position.
c. Proceeds from the sale exceeded the book value of the asset on the
statement of financial position.
d. Proceeds from the sale are equal to the historical cost of the asset on the
statement of financial position.

Problem (60%)

1. Longbine Company’s ledger at the end of the current year shows Accounts
Receivable of $150,000.

Instructions
a. If Allowance for Doubtful Accounts has a credit balance of $3,000 in the

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 trial balance and bad debts are expected to be 4% of accounts receivable,
journalize the adjusting entry for the end of the period.

b. If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial
balance and bad debts are expected to be 4% of accounts receivable,
journalize the adjusting entry for the end of the period.

Ans: N/A, LO: 2, Bloom: AN, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN:

Measurement, AICPA PC: Problem Solving, IMA: FSA

Solution 211 (5 min.)

(a) Bad Debts Expense ................................................................ 3,000
Allowance for Doubtful Accounts ($6,000 – $3,000) ....
3,000
(To adjust the allowance account to total estimated uncollectible,
$150,000 × .04 = $6,000)

(b) Bad Debts Expense ................................................................ 9,000

Allowance for Doubtful Accounts ($6,000 + $3,000) ....
9,000

2. Moore Company had a $700 credit balance in Allowance for Doubtful

Accounts at December 31, 2020, before the current year's provision for
uncollectible accounts. An aging of the accounts receivable revealed the
following:

Instructions
(a) Prepare the adjusting entry on December 31, 2020, to recognize bad debts
expense.
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(b) Assume the same facts as above except that the Allowance for Doubtful
Accounts account had a $500 debit balance before the current year's
provision for uncollectible accounts. Prepare the adjusting entry for the
current year's provision for uncollectible accounts.

3. Newman Stores accepts both its own and national credit cards. During the
year the following selected summary transactions occurred.

Jan. 15 Made Newman credit card sales totaling $27,000. (There were no
balances prior to January 15.)
20 Made Visa credit card sales (service charge fee 2%) totaling $7,500.
Feb. 10 Collected $12,000 on Newman credit card sales.
15 Added finance charges of 1% to Newman credit card balance.

Instructions
(a) Journalize the transactions for Newman Stores.

(b) Indicate the statement presentation of the financing charges and the credit
card service charge expense for Newman Stores.

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4. On February 28, Landis Company had accounts receivable in the amount of
$437,000 and Allowance for Doubtful Accounts had a credit balance of $2,140
before adjustment. Net credit sales for February amounted to $2,500,000. The
credit manager estimated that uncollectible accounts expense would amount to
2% of accounts receivable. On March 10, an accounts receivable from Kathy
Brown for $6,100 was determined to be uncollectible and written off. However,
on March 31, Brown received an inheritance and immediately paid her past due
account in full.

Instructions
(a) Prepare the journal entries made by Landis Company on the following
dates:
1. February 28
2. March 10
3. March 31

(b) Assume no other transactions occurred that affected the allowance account
during March. Determine the balance of Allowance for Doubtful Accounts
at March 31.

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5. Ripken Supply Co. has the following transactions related to notes receivable
during the last 2 months of 2019.

Nov. 1 Loaned $30,000 cash to Linda Waters on a 1-year, 8% note.

Dec. 11 Sold goods to Wainwright, Inc., receiving a $13,500, 90-day, 8%
note.
16 Received an $8,000, 6-month, 9% note in exchange for Don
Garbo's outstanding accounts receivable.
31 Accrued interest revenue on all notes receivable.

Instructions
(a) Journalize the transactions for Ripken Supply Co.
(b) Record the collection of the Waters note at its maturity in 2020.

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6. On March 1, 2020, Joyner Company acquired real estate on which it planned
to construct a small office building. The company paid $65,000 in cash. An old
warehouse on the property was razed at a cost of $7,600; the residual materials
were sold for $1,700. Additional expenditures before construction began
included $1,100 attorney’s fee for work concerning the land purchase, $4,000
real estate broker’s fee, $7,800 architect’s fee, and $14,000 to put in driveways
and a parking lot.

Instructions
Determine the amount to be reported as the cost of the land.

Solution 264 (4 min.)

Cost of land
Cash paid............................................. $65,000
Net cost of removing warehouse .... 5,900
($7,600 – $1,700)
Attorney’s fee ................................... 1,100
Real estate broker’s fee .................. 4,000
Total .......................................... $76,000

7. Chang Company purchased a machine at a cost of ¥1,800,000. The machine

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is expected to have a ¥100,000 residual value at the end of its 5-year useful
life.

Instructions
Compute annual depreciation for the first and second years using the
(a) straight-line method.
(b) double-declining-balance method.

Solution 265 (8 min.)

(a) Straight-line method:
Years 1 and 2 depreciation = ¥340,000/yr. (¥1,800,000 – ¥100,000)  5

(b) Double-declining-balance method:

Year 1 depreciation = ¥720,000 (¥1,800,000 – 0) × *40%
Year 2 depreciation = ¥432,000 (¥1,800,000 – ¥720,000) × 40%
*(1/5 × 2)

8. The Nichols Clinic purchased a new surgical laser for $80,000. The estimated
residual value is $5,000. The laser has a useful life of five years and the clinic
expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours
in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5.

Instructions
(a) Compute the annual depreciation for each of the five years under each of
the following methods:
(1) straight-line.
(2) units-of-activity.
(b) If you were the administrator of the clinic, which method would you deem
as most appropriate? Justify your answer.

(c) Which method would result in the lowest reported income in the first year?
Which method would result in the lowest total reported income over the
five-year period?

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(b) The units-of-activity method can be justified based on the variable usage
the laser will receive during its useful life.

(c) The straight-line method provides the highest depreciation expense for the
first year, and therefore the lowest first year income. Over the five-year
period, both methods result in the same total depreciation expense
($75,000) and, therefore, the same total income.

9. Equipment was acquired on January 1, 2016, at a cost of ¥2,000,000. The

equipment was originally estimated to have a residual value of ¥100,000 and
an estimated life of 10 years. Depreciation has been recorded through
December 31, 2019, using the straight-line method. On January 1, 2020, the
estimated residual value was revised to ¥140,000 and the useful life was
revised to a total of 8 years.

Instructions
Determine the Depreciation Expense for 2020.

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10. Presented below are selected transactions for Corbin Company for 2020.

Jan. 1 Received $3,000 scrap value on retirement of machinery that was

purchased on January 1, 2009. The machine cost $90,000 on that
date, and had a useful life of 10 years with no residual value.

April 30 Sold a machine for $31,000 that was purchased on January 1, 2017.
The machine cost $90,000, and had a useful life of 5 years with no
residual value.

Dec. 31 Discarded a business automobile that was purchased on April 1,

2016. The car cost $42,000 and was depreciated on a 5-year useful
life with a residual value of $2,000.

Instructions
Journalize all entries required as a result of the above transactions. Corbin
Company uses the straight-line method of depreciation and has recorded
depreciation through December 31, 2019.

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選擇題答案

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

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