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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.

50. A company is considering issuing serial bonds. Which statement correctly describes serial bonds? 1. All bonds in the issue mature on the same date 2. The bonds never require repayment of principal 3. Portions of the bond issue mature on several different dates 4. The bonds can always be converted into common stock Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

36. An hourly employee earns $18 per hour. The employee receives the regular hourly rate for the first 40 hours and one and one-half times the regular hourly rate for hours worked over 40. The employee works 45 hours during the week. What is the employee’s gross pay? 1. $810 2. $837 3. $855 4. $900 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

23. Pierce Company holds an $18,000, 90-day, 10% note dated December 1. Pierce Company’s accounting period ends December 31. For this question, calculate interest for 30 days. Use a 360-day year and the following formula: Interest = Principal × Annual interest rate × 30 ÷ 360 How much Interest Revenue should Pierce accrue on December 31? 1. $150 2. $450 3. $1,350 4. $1,800 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

24. Taylor Company reports net credit sales of $720,000. Taylor’s beginning Accounts Receivable balance was $60,000, and its ending Accounts Receivable balance was $84,000. What is Taylor Company’s accounts receivable turnover ratio? 1. 8.6 times 2. 9.0 times 3. 10.0 times 4. 12.0 times Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

30. Equipment costs $40,000 and has a five-year useful life. The company uses the double-declining-balance method. Use the following procedures: Straight-line rate = 100% ÷ 5 years = 20%Double-declining rate = 20% × 2 = 40%Year 1 depreciation = $40,000 × 40%Year 2 depreciation = Beginning book value for Year 2 × 40% What is depreciation expense for Year 2? 1. $6,400 2. $8,000 3. $9,600 4. $16,000 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

40. Hamilton Company sells $400,000 of products with warranties. Hamilton estimates that warranty repair costs will equal 2% of sales. What amount of Warranty Expense should Hamilton record? 1. $4,000 2. $6,000 3. $8,000 4. $20,000 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.

4. River City Hardware uses a perpetual inventory system and FIFO. At the beginning of the month, River City had 50 units that cost $8 each. River City then purchased 30 additional units that cost $10 each. After the purchase, River City sold 60 units. Under perpetual FIFO, the 50 beginning units are sold first. The remaining 10 units sold come from the later purchase. What is River City’s cost of goods sold? 1. $480 2. $500 3. $560 4. $600 Instructions to students: Type in the correct number. Do not type in a decimal after inputting the number.