Question

16)

A company purchases machinery for $10,000. It also spends $800 to ship it to its location, $600 to unpack and install it, $500 to test and debug it, and $300 to fix a crack caused by an accident during installation. The total cost of this machinery is

		$10,000
		$11,100
		$12,200
		$11,900

17)

When preparing a bank statement reconciliation, an NSF check should be

		an addition to the Bank Statement balance.
		an addition to the Book balance.
		a deduction from the Book balance.
		a deduction from the Bank Statement balance.

18)

At the end of 2019, the company's unadjusted trial balance reported the following selected amounts:

Accounts receivable $355,000 debit

Allowance for uncollectible accounts    $500 credit

Net sales $800,000 credit

Assume the company determines its bad debt expense based on an aging which indicates that $1,775 is uncollectible. What amount should be debited to Bad Debt Expense when the year-end adjusting entry is prepared?

		$2,275
		$1,275
		$500
		$1,775

Answer 1

Solution

16. Correct option is $12200 because all the expense incurred until the production of machine will be capitalize. So, all expense will add to the cost of machine.

17. correct answer is "an addition to the book balance" because when we issued the cheque we already deduct the amount from books but its not cleared by the bank so if we want match the balance with bank we should add to the book balance.

18. correct answer is "$1275" because we already recognised $500 as bad debt so $1275 (1775-500) is more required as bad debt expense.

Thank You.

Hoping for the positive rresponse.