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35. Kinder Co. purchased a car for $25,000, with an estimated useful life of 5 years...

35. Kinder Co. purchased a car for $25,000, with an estimated useful life of 5 years and a residual value of $10,000. Kinder uses the straight-line depreciation method. After two years of use, the life of the car was increased by one (1) year, but the residual value remained unchanged. The depreciation on the car in year three should be:

a. $3,000

b. $2,250

c. $4,500

d. $2,500

If ending inventory is miscounted, resulting in an understatement of ending inventory on the Balance Sheet at the end of this period, then the Net Income for this period will be overstated.

a. True

b. False

   Use the following table for this question:

                 Periods                                                     F.V. Single at 12%                                              F.V. Annuity at 12%

                       1                                                                    1.120                                                                      1.000

                       2                                                                    1.254                                                                      2.120

                       3                                                                    1.405                                                                      3.374

37. If a bank deposit of $1,000 is made today at 12% compounded annually, what will be the future value of the deposit in three years?

a. $3,374

b. $2,120

c. $1,251

d. $1,405

38. A debit balance in Allowance for Uncollectible Accounts indicates that

a. the actual amount of uncollectible accounts was less than the company estimated they would be

b. the company uses the percent of credit sales method to allow for uncollectible accounts

c. the actual amount of uncollectible accounts was more than the company estimated they would be
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Homework Answers

Answer #1

35.

Accumulated dep for 2 years = ((25,000-10,000)/5) x 2 years = $6,000
Book value at the beginning of year 3 = $25,000 - $6,000 = $19,000
Depr. Expense for third year = (19,000-$10,000) / 4 years = $2,250
Answer: b. $2,250

36. False, because cost of goods sold is overstated and the net income is understated.

37. Future value of depost in 3 years = $1,000 x 1.405 = $1,405

Answer: b. $1,405

38. The actual amount of uncollectible accounts was more than the company estimated they would be

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