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6. Evans Company has damaged inventory that originally cost $5,000. Evans expects to sell the damaged inventory for $4,600. Evans expects to incur $300 of direct selling and disposal costs. For this question, net realizable value equals the estimated selling price minus the direct selling and disposal costs. Inventory must be reported at the lower of its original cost or net realizable value. At what amount should Evans report the damaged inventory? 1. $4,300 2. $4,600 3. $4,700 4. $5,000 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

29. A machine costs $50,000, has an estimated residual value of $5,000, and is expected to operate for 90,000 hours. The machine operates for 18,000 hours during the current year. Use the following formulas: Depreciation per hour = (Cost − Residual value) ÷ Estimated total hoursDepreciation expense = Depreciation per hour × Hours used during the year What is depreciation expense under the units-of-activity method? 1. $9,000 2. $10,000 3. $11,250 4. $18,000 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

3. Carter Electronics uses the periodic inventory system. During March, Carter had the following units available for sale: Beginning inventory: 100 units at $10 eachMarch purchase: 100 units at $12 eachMarch purchase: 100 units at $14 each Carter sold 220 units during March. Under the periodic weighted average method, divide the total cost of all units available for sale by the total number of units available. Apply that average unit cost to the 220 units sold. What is Carter’s cost of goods sold? 1. $960 2. $2,480 3. $2,800 4. $2,640 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

7. Jackson Company reports annual cost of goods sold of $240,000. Jackson’s beginning inventory was $40,000, and its ending inventory was $56,000. Use the following formulas: Average inventory = (Beginning inventory + Ending inventory) ÷ 2Inventory turnover = Cost of goods sold ÷ Average inventory What is Jackson Company’s inventory turnover ratio? 1. 4.3 times 2. 4.8 times 3. 5.0 times 4. 5.5 times Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

19. Wilson Company uses an aging schedule to estimate uncollectible accounts. The aging schedule indicates that Allowance for Doubtful Accounts should have an ending credit balance of $18,500.Before adjustment, Allowance for Doubtful Accounts already has a $3,200 credit balance. How much Bad Debt Expense should Wilson record? 1. $3,200 2. $15,300 3. $18,500 4. $21,700 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

49. A company issues bonds with an 8% contract interest rate. Similar bonds currently offer investors a 10% market interest rate. How will the bonds sell? 1. At a discount 2. At a premium 3. At face amount 4. Only after the contract rate is increased Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

33. Clayton Company reports annual sales of $900,000. Clayton’s beginning net fixed assets were $300,000, and its ending net fixed assets were $420,000. What is Clayton Company’s fixed asset turnover ratio? 1. 2.0 times 2. 2.1 times 3. 2.5 times 4. 3.0 times Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

25. A company uses the allowance method for uncollectible accounts. Before a specific customer account is written off, both Accounts Receivable and Allowance for Doubtful Accounts include the amount related to that customer. When the account is written off, Accounts Receivable and Allowance for Doubtful Accounts decrease by the same amount. What happens immediately to the net realizable value of the company’s total receivables? 1. It increases 2. It decreases by the amount written off 3. It becomes zero 4. It remains unchanged Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

5. Martin Supply uses a perpetual inventory system and the moving weighted average method. Martin has 40 units that cost $10 each. Martin then purchases 60 units that cost $14 each. After the purchase, Martin calculates a new average cost per unit by dividing the total cost of the 100 units by 100 units. Martin then sells 50 units. What is Martin Supply’s cost of goods sold? 1. $500 2. $600 3. $620 4. $700 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

37. An employee earns gross pay of $2,000. The employee has the following payroll deductions: Social Security tax: 6% of gross payMedicare tax: 1.5% of gross payFederal income tax: $220State income tax: $60Insurance: $70 Use the following formula: Net pay = Gross pay − Total employee deductions What is the employee’s net pay? 1. $1,430 2. $1,500 3. $1,570 4. $1,650 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.