Category: Uncategorized

Eagle Corp. made an ordinary repair to its lab equipment at a cost of $500 and purchased a motor for $3,000.  Eagle Corp.’s accountant debited the asset account for $3,500.  Is the accounting treatment an error?  If it is an error what is the effect on assets and net income for the year the expenditures were made?

Eagle Corp. purchased a new piece of equipment on January 1, 2024.  The equipment had a list price of $110,000, however the seller agreed to allow Eagle Corp. to pay for the equipment in 10 yearly installments of $14,000 on December 31 of each year.  Assuming the note incurs interest at 8% annually, what amount should Eagle Corp. debit the equipment account for on the date of purchase? (Round to the nearest dollar).   Answer:  $_______

Eagle Corp. has total assets as follows: $40,000 in cash, $20,000 in short-term investments, $110,000 in net current receivables, equipment of $60,000, and $8,000 in prepaid expenses. The total long-term liabilities of the firm are $160,000 and total liabilities are $240,000.  Based solely on the above information, Eagle Corp.’s current ratio is (round to two decimal places):  

On January 1, 2024, the beginning balance in the Warranties Liability account was $65,000. Cash sales for the year totaled $450,000 and credit sales totaled $850,000.  The company estimates warranty costs at 7% of sales. During the year, $70,000 was paid to settle warranty claims. As a result of these transactions, what is the amount of warranty liability that is reported on the company’s 2024 year end balance sheet?   Answer:  $_______

Eagle Corp. issues a $951,000, 10% 4 year notes payable on January 1, 2024.  The note will be repaid in four annual installments of $300,000, each payable at the end of the year (i.e. $300,000 at the end of 2024, $300,000 at the end of 2025, $300,000 at the end of 2026, and $300,000 at the end of 2027).  What is the amount of interest expense that should be recorded by Eagle Corp. in the second year (i.e. on the income statement for the year ended December 31, 2025)?  (Round to the nearest dollar).   Answer:  $_______

John Smith wants to retire in 15 years.  He anticipates he will need $3,000,000 to retire.  John has an account that currently pays 7% compounded annually.  If John has $850,000 in his account today how much additional money must he deposit in the account today to have $3,000,000 when he retires (use the appropriate factor table(s) to answer the question and round to the nearest dollar).  Answer:  $_______

Eagle Corp. had accounts receivable of $200,000 at the beginning the year and $160,000 at the end of the year and accounts payable at the beginning of the year of $100,000 and $90,000 at the end of the year. If the total cash collected from customers was $850,000, what was total sales revenue for the period?   Answer:  $_______

On January 1, 2023, Eagle Corp. purchased a commercial truck for $60,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000.  On December 31, 2024, the truck was exchanged for a new truck. At the time of the exchange the FMV of the old commercial truck was $42,000. In addition to trading in the old truck. Eagle Corp. also paid $30,000 of cash for the exchange.  What amount of gain or loss should Eagle Corp. record on December 31, 2024?

On April 1, 2024 Eagle Corp. purchased $60,000 of Bobcat Inc.’s 8% bonds at a purchase price of 105. At the time of purchase the market rate of interest was 6%.  Eagle Corp. whose year end is December 31, expects to hold the bonds until their maturity date 5 years from the date of purchase. Interest on the bonds will be paid every April 1 and October 1 until maturity.  What is the carrying value (amortized cost) of the bond that Eagle Corp. would report on October 1, 2024?   Answer:  $_______

The records of Eagle Corp.  showed the following on December 31, 2024:   Net Purchases   $350,000 Purchase Returns $30,000 Gross Profit  $375,000 Beginning Inventory $20,000 Gross Sales Revenue $600,000 Sales Returns $60,000   Calculate Eagle Corp.’s Inventory Turnover Ratio for 2024? (round to two decimal places)