Question

1. A coal mine cost $1,001,000 and is estimated to hold 58,000 tons of coal. There is no residual value. During the first year of operations, 5,000 tons are extracted and sold. Calculate depletion per unit. (Round your answer to the nearest cent.)

A. 8.63

B. 4.32

C. 12.94

D. 17.26

2. Industrial Equipment Supply is a new business. During its first year of operations, credit sales were $ 45,000 and collections of credit sales were $36,000. One account, $700, was written off. Management uses the agingminus−ofminus−receivables method to account for bad debts expense and estimated $575 as uncollectible at year end. The ending balance of the Allowance for Bad Debts is ________.

A. 1275

B. 575

C. 650

D. 1350

3. On October 1, 2019, Fashion Jewelers accepted a 5 month, 13% note for $6,500 in settlement of an overdue account receivable. The accounting period ends on December 31. Calculate the accrued interest on the note at December 31, 2019. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

A. 423

B. 211

C. 845

D. 352

4. Masonry Construction Group paid $9,000 for a plant asset that had a market value of $15,500. At which of the following amounts should the plant asset be recorded?  

A. 18000

B. 4500

C. 9000

D. 15500

Answer 1

1.

Depletion per unit = Cost of coal mine/Number of units available

= 1,001,000/58,000

= $17.26

Correct option is (D)

2.

One account, $700, was written off during the year. Management estimated $575 as uncollectible at year end. Hence, the ending balance of the Allowance for Bad Debts is $1275 (700 + 575)

Hence, correct option is (A)

3.

Interest accrued on note = Note amount x Interest % x Time period

= 6,500 x 13% x 3/12

= $211

Correct option is (B)

4.

Masonry Construction Group paid $9,000 for a plant asset that had a market value of $15,500. Plant asset should be recorded in the books of accounts at $9,000 i.e. purchase price. Assets are recorded in the books at the price paid to acquire them. Hence, plant asset should be recorded at $9,000 and not the market value of $15,500

Correct option is (C)