Question 1 A company was recently formed with $ 50,000 cash contributed to the company by stockholders. The company

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Question 1

A company was recently formed with $ 50,000 cash contributed to the company by stockholders.  The company then borrowed $ 20,000 from a bank and bought $ 10,000 of supplies on account. The company also purchased $ 50,000 of equipment by paying $ 20,000 in cash and issuing a note for the remainder.  What is the amount of total assets to be reported on the balance sheet?

 

$ 110,000   

$ 90,000 

$ 100,000 

$120,000

 

Question 2

A company purchases $23,000 of supplies in the current month and promises to pay for them next month.  How would the company record a liability for the supplies?

 

This liability is not a recognized liability until the payment is due. 

$23,000 would be posted as a credit to accounts payable. 

$23,000 would be posted as a credit to supplies expense. 

$23,000 would be posted as a debit to accounts payable.

 

Question 3

A company was recently formed with $ 100,000 cash contributed to the company by stockholders. The company then borrowed $ 50,000 from a bank and bought a $ 20,000 vehicle for cash.  They also purchased $10,000 of equipment by paying $ 2,000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet?

 

$ 158,000    

$ 160,000 

$ 162,000 

$ 100,000

 

Question 4

A company has net sales of $500,000 and cost of goods sold of $400,000.  The company’s gross profit percentage is:

 

80% 

20%           

50% 

10%

 

Question 7

Post Company began the current month with $10,000 in inventory, then purchased inventory at a cost of $35,000.  The inventory at the end of the month was $20,000.  The cost of goods sold would be:

 

$30,000 

$35,000 

$25,000       

$15,000

 

Question 8

A company lends its CEO $150,000 for 3 years at a 6% annual interest rate.  Interest payments are to be made twice a year.  Each interest payment will be for:

 

$9,000 

$4,500           

$27,000 

$13,500

 

Question 9

Post Company lends Blue Company $40,000 on April 1, accepting a 4 month, 4.5% interest note. Post Company prepares financial statements on April 30. What adjusting entry should they make?

 

Debit note receivable $40,000; Credit Cash $40,000 

Debit interest receivable $150; Credit interest revenue $150 

Debit cash $150; Credit interest revenue $150 

Debit interest receivable $600; Credit interest revenue $600

 

Question 11

Post Company uses straight- line depreciation for all of its depreciable assets.  Post sold a piece of machinery on December 31, 2009, that it purchased on January 1, 2009 for $ 2,000. The asset had a five year life and zero residual value.  Accumulated depreciation was $400. If the sales price of the used machine was $ 1,200, the resulting gain or loss on disposal was which of the following amounts?

 

Loss of $ 400.      

Loss of $ 800. 

Gain of $ 400. 

Gain of $ 1,200

 

Question 12

On July 1, 200X you enter into a note payable of $200,000 with a 5% annual interest rate.  Your interest expense for 200X will be:  

 

$2,500 

$10,000 

$2,000 

$5,000      

 

Question 13

Post Company issues a 6 year, 6%, $200,000 bond at par on July 31.  How much interest will be paid over the life of the bond?

 

$4,000 

$6,000 

$12,000 

$72,000       

 

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