Question

1-On April 30, 2018, Loufti Company declared a dividend of $40,000. Loufti Company decided that the dividend would be paid on June 15, 2018, to all shareholders of record on May 25, 2018. The journal entry to record the payment of the dividend on June 15 would include a
a.Credit to Dividends of $40,000
b.Debit to Dividends of $40,000
c.Debit to Cash of $40,000
d.Debit to Dividends Payable of $40,000

2-Inventory costs include all of the following, EXCEPT
a.Selling costs
b.Production costs
c.Purchase costs
d.Freight costs

3-When crediting accumulated depreciation account to record a depreciation expense, which of
the following best describes the impact of this transaction?
a.Total assets remain the same and owner's equity remains the same.
b.Total assets decrease and owner's equity decreases.
c.Total assets increase and owner's equity decreases.
d.Total liabilities increase and owner's equity decreases.

4- When purchasing an entire company, what is the accounting term for the purchase price in excess of identifiable assets?
a.Goodwill
b.Excess value
c.Patent
d.Intangible asset

5-Claflin Construction Company purchased a machine on January 1, 2016 for $411,000. The machine has an estimated useful life of 8 years and a salvage value of $27,000. In 2018, Claflin determines that the machine will actually have a total useful life of 5 years and the salvage value will be $15,000. If Claflin uses straight-line depreciation, what will be the balance of the accumulated depreciation account on December 31, 2018?
a.$100,000.
b.$144,000.
c.$244,000.
d.$196,000.

Answer 1

1

The journal entry to record the payment of the dividend on June 15 would include a:

Debit to Dividends Payable of $40,000

Credit to Cash of $40,000

Option D is correct

2

Inventory costs include all of the following, EXCEPT Selling costs

Inventory costs include all costs necessary to bring the inventory to its present location and condition.

Option A is correct

3

When crediting accumulated depreciation account to record a depreciation expense:

Total assets decrease and owner's equity decreases.

Option B is correct

4

The accounting term for the purchase price in excess of identifiable assets is Goodwill

Option A is correct

5
Depreciable cost	384000	=411000-27000
Divide by Estimated useful life	8
Annual depreciation	48000
Accumulated depreciation for 3 years	144000	=48000*3
Option B $144,000 is correct