Chapter 8
At the end of 2024, Safer Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $25,000. On January 24, 2025, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,300. What account is debited and what account is credited?
Credit: Accounts receiveable
Corrieten Company purchased equipment and incurred these costs:
Cash price:$24,000
Sales taxes: 1,200
Insurance during transit: 200
Installation and testing: 400
Total costs: $25,800
What amount should be recorded as the cost of the equipment?
$25,800 all of them
On January 1, 2025, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to record the issuance of the bonds would include a debit to ____ and a credit to ____?
Cash and Bonds Payable
An expense account to record losses from extending credit.
Bad Debt Expense
The president on the $20 bill is _____ and he was the __#___ president of the United States.
Andrew Jackson, 7th president of the United States
A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period is called the...
Allowance Method
Cuso Company purchased equipment on January 1, 2024, at a total invoice cost of $400,000. The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2025, if the straight-line method of depreciation is used?
$78,000
Ottman Company borrows $88,500 on September 1, 2025, from Farley State Bank by signing an $88,500, 12%, 1-year note. What is the accrued interest at December 31, 2025?
$3,540
The process of allocating to expense the cost of an intangible asset.
Amortization
What Taylor Swift tour was cancelled in 2020?
Lover Fest
Net credit sales for the month are $800,000. The accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage-of-receivables basis. If Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment, what is the balance after adjustment?
$12,000
Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2025. The machine was purchased for $80,000 on January 1, 2021, and was depreciated on a straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale?
$18,000 loss
Alexis Company does not segregate sales and sales tax, if they have total proceeds from sales of $4,515. If the proceeds include sales taxes of 5%, what is the amount to be credited to Sales Revenue?
$4,300
The difference between the selling price and the face value of a bond when a bond is sold for more than its face value.
Premium
Who is the most-followed person on Instagram as of 2025?
Cristiano Ronaldo
In 2025, Patterson Wholesale Company had net credit sales of $750,000. On January 1, 2025, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2025, $30,000 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 $200,000, what is the required adjustment to Allowance for Doubtful Accounts at December 31, 2025?
$32,000
Jefferson Company purchased a piece of equipment on January 1, 2025. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the asset for 2026 under the double-declining-balance method?
$11,250
On January 1, 2025, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. What account is debited and what account is credited?
Debit: Cash
Credit: Bonds Payable
Amount of principal due at the maturity date of the bond.
Face Value
Which three nations became known as the "big 3" in WW2?
Soviet Union, United States, Great Britain
Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $100,000 and at the end of the year was $150,000. What was the accounts receivable turnover and average collection period in days?
6.4 and 57 days
Able Towing Company purchased a tow truck for $60,000 on January 1, 2025. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $12,000. On December 31, 2027, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2027) and the salvage value to $2,000. What was the depreciation expense for 2027?
$12,100
Goethe Corporation redeems its $100,000 face value bonds at 105 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $103,745.What three accounts are debited and what account is credited?
Debit: Bonds payable, premium on bonds payable, Loss on bond redemption
Credit: Cash
A profitability measure that indicates the amount of net income generated by each dollar of assets; computed as net income divided by average total assets.
Return on Asset
Which African country has the most pyramids?
Sudan