1.-Prepaid insurance had a balance of $1000 on the company's Dec 31, 2011 balance sheet. On June 1, 2012, the company paid an additional insurance premium of $3,000. Prepaid insurance had a balance of $1,250 on the company's December 31, 2012 balance sheet. How much cash paid for insurance will be reported on the company's statement of cash flows for the year ended December 31, 2012?
-Maxine Inc. bought a machine on January 1, 2012 for $48,000. The machine is expected to last for 8 years, after which it will be worthless. What is the book value of the machine on Maxine's balance sheet at December 31, 2012?
A) $6,000
B)$48,000
C.)$44,000
D)$42,000
2.-Clean Sweep, Inc. started the month of June with $600 worth of cleaning supplies. During the month, Clean Sweep purchased $400 of supplies for cash. At June 30, $300 worth of supplies was unused. How will the company report these events on its statement cash flows for the month of June?
A.) The statement of cash flows will show supplies expense of $(1000)
B.) The statement of cash flows will show $(400) cash paid for supplies.
C.) The statement of cash flows will show supplies expense of $(700)
D. This is a trick question.
3.-Ace Electronics bought a new factory for $5,000,000. The factory was originally offered for sale for $5,200,000, but Ace successfully negotiated a lower price. Acme, Inc. was also trying to buy the factory and offered to pay $4,900,000. Ace should record the factory on its books at_____.
A.) $4,500,000
B.) $5,200,000
C.) $5,000,000
D.) $4,900,000
4.-The employees of Roll n Dough, Inc. get paid every friday for a 5-day workweek (Monday through Friday). The total payroll is $3,000 per day of work. If the accounting period ends on thursday of a given week, what adjustment must be made to the company's accounting records?
A.) INcrease salaries payable by $15,000 and decrease shareholders equity by recognizing Salaries expense for the same amount.
B.)Decrease Cash by $12,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
C.)Increase Salaries payable by $12,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
D.) No adjustment is necessary because there is no expense until the employees are paid on Friday.
5.-Avatar, INc. bought a machine on January 1, 2011 for $96,000. The machine is expected to last for 8 years, after which it will be worthless. How much accumulated depreciation will Avatar report at December 31, 2011?
A.)96,000
B.)16,000
C.)12,000
D.)0
6.-Slumbers, Inc. borrows $3000 at 12% from a bank on September 1, 2012 and agrees to pay the interest and principal in two years. Which of the following will be reported on the year ended December 31, 2012?
A.)The income statement will report interest expense of $360.
B.)The income statement will report interest expense of $0.
C.)The balance sheet will report interest payable of $120.
D.) The statement of cash flows will report Cash paid for interest of $120.