problem 1: A company issued a $10,000, 90-day, non-interest-bearing note to the bank. The bank discounted the note by 10% (annualized percentage). What were the proceeds? Suppose 360 days in a year:
problem 2: ABC Company’s equipment was obtained for $200,000 and has a current book value of $125,000. The estimated market value of the equipment is $140,000 and the replacement cost of the equipment is $225,000. At what amount must the equipment be reported on the balance sheet?
problem 3: Unearned revenue is categorized as the given type of account:
a. Current Asset
c. Long-Term Asset
problem 4: The total contract price for a construction project was $10,000,000 with an estimated construction cost of $7,500,000. Throughout the current year 30% of the project was completed and the cost incurred was $2,750,000. By using the percentage of completion technique of accounting, what amount of income would be identified for the year for this project:
problem 5: Acme Company is a business entity which has a reasonable expectation of continuing its business at a profit for an indefinite period of time. This is an illustration of the application of which of the given accounting concepts:
a. Business entity
c. Going concern
problem 6: Albert and Brian invest $150,000 and $75,000 correspondingly in a partnership and agree to a division of net income which provides for an allowance of interest at 8% on the original investments, salary allowances of $12,000 and $20,000 correspondingly and with the remainder divided equally (all in a given year). What would be Albert’s share of net income of $65,000 in a year:
problem 7: Deferred revenues of $100,000 were received and appropriately recorded in the ledger of the company. At the end of the accounting period, 20% of the deferred revenue had been earned, however unrecorded. The adjusting entry will need:
a. A debit to Cash and credit to Revenues for $20,000.
b. A debit to Unearned Revenues and a credit to Accounts Payable for $20,000.
c. A debit to Unearned Revenues and a credit to Cash for $20,000.
d. A debit to Unearned Revenues and a credit to Revenues for $20,000.
problem 8: Throughout its first year of operation, XYZ Company elected to use the straight line depreciation method for financial reporting purposes and the sum-of-the-years digits method to find out taxable income. The income tax rate is 35% and the amount of depreciation expense is $80,000 under the straight line method and $120,000 under the sum-of-the-years digits method. Determine the amount of income tax deferred to future years:
problem 9: The bonds payable account has a balance of $750,000 and the discount on bonds payable account has a balance of $150,000. Determine the carrying amount of the bonds:
problem 10: Assets total $700,000, liabilities total $150,000, and contributed capital totals $250,000. Determine the dollar amount of retained earnings: