1) On April 1, 2010, a company disposed of equipment for $14,200 cash that had cost
$35,000 on January 1, 2006. The equipment had a salvage value of $5,000, and a useful
life 10 years. The double-declining-balance depreciation method was used. On
December 31, 2009, accumulated depreciation was $20,664. Prepare a journal entry to
record depreciation for 2010 up to the date of disposal of the equipment, and prepare a
journal entry to record the disposal of the equipment.
2) The following information is available for Hughes Co.
From the information provided, calculate Hughes’ profit margin ratio for each of the
three years. In 2010 economic conditions and a slowing economy impacted the results
of operations. Comment on the results, assuming that the industry average for the profit
margin ratio is 7% for each of the three years.
3) A company had the following items and amounts in its unadjusted trial balance as of
December 31 of the current year:
Prepare the adjusting entry to estimate bad debts under each of the following separate
situations.
1> Bad debts are estimated to be 2.5% of credit sales.
2> An aging analysis estimates that 8% of the outstanding accounts receivable will be
uncollectible.
4) Halam Company had the following transactions relating to investments in trading
securities during the year. Prepare the required general journal entries for these
transactions.
5) ______________________ revenues are liabilities requiring delivery of products and
for services.
6) Define and explain significant noncash investing and financing activities and the
method of reporting them on the statement of cash flows.
7) Using the accounting equation, equity is equal to _______________________.
8) A company uses a job order cost accounting system and applies overhead on the
basis of direct labor cost. A summary of the company’s Goods in Process Inventory
account for December appears below.
Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead applied in
the December 31 goods in process inventory is $_______________________.
(2) The company’s overhead application rate is ____________________%
(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had
$__________ of direct materials cost.
(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had
$__________ of factory overhead cost.
9) Complete the following by filling in the blanks:
(1) The Prepaid Insurance account had a $455 debit balance at the beginning of the
current year; $650 of insurance premiums were paid during the year; and the year-end
balance sheet showed $420 of prepaid insurance; consequently, the income statement
for the year must have shown $_______________ of insurance expense.
(2) The Office Supplies account began the current year with a $235 debit balance; the
income statement for the year showed $475 of office supplies expense; and the year-end
balance sheet showed the current asset, office supplies, at $225; consequently, if all
supplies were accounted for, $_____________ of office supplies must have been
purchased during the year.