Question

19. Equipment was purchased on January 1 for $30,000 with an estimated residual value of $5,000. The current year's Depreciation Expense is $5,000, calculated on the straight-line basis, and the balance of the Accumulated Depreciation account at the end of the year is $10,000. The remaining useful life of the equipment is

Question 19 options:

	3 years.
	5 years.
	6 years.
	9 years.
	None of the above

20. Sports Inc. uses the average cost formula in a perpetual inventory system.
(Use unrounded numbers in your calculations but round your final answer to the nearest cent.)

Jun 1	Beginning inventory	20 units @ $19.00 per unit
Jun 5	Purchase	100 units @ $22.00 per unit
Jun 8	Sale	70 units
Jun 9	Purchase	80 units @ 22.31 per unit
Jun 10	Sale	25 units
Jun 22	Sale	40 units

If Sports Inc. was using the FIFO cost formula instead of average, gross profit from the June 8 sale would be

Question 20 options:

	higher.
	the same.
	lower.
	cannot be determined.
	none of the above.

21. When an account is written off using the allowance method for uncollectible accounts, the

Question 21 options:

	net realizable value of total accounts receivable will increase.
	net accounts receivable will decrease.
	allowance account will increase.
	net accounts receivable will stay the same.
	None of the above.

22. Fantastic Fashions has just completed its first quarter of operations. Assume that Fantastic Fashions adjusts its book quarterly. Below are transactions that have not yet been recorded.

Jan 1 Made cash sales of $75,000 before tax. HST is collected on all sales at a rate of 13%.

Jan 15 Signed a six month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.

Mar 1 Received the annual property tax bill for $7,500 payable on Apr 30.

Apr 1 Paid gross salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes.

Apr 30 Paid the property taxes bill in full.

The journal entry to record property tax on Mar 1 is

Question 22 options:

Property Tax Expense		1,875
	Property Tax Payable		1,875

Property Tax Payable		1,250
	Property Tax Expense		1,250

Property Tax Expense		1,250
	Property Tax Payable		1,250

Property Tax Expense		7,500
	Property Tax Payable		7,500

None of the above

Answer 1