Problem 1: Larson Company on July 15, sells merchandise on account to Stuart Co. for $1,000, terms 2/10, n/30. On July 20, Stuart Co. returns merchandise worth $400 to Larson Company. On July 24, payment is received from Stuart Co. for the balance due. What is the amount of cash received?
a) $600 b) $588 c) $580 d) $1,000
Problem 2: On July 1, the Winter Shoe Store paid $12,000 to Ace Reality for 6 months rent beginning July 1. Prepaid rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Winter Shoe Store is
a) Debit Rent Expense, $12,000; Credit Prepaid Rent, $2,000.
b) Debit Prepaid Rent, $2,000; Credit Rent Expense, $2,000.
c) Debit Rent Expense, $2,000; Credit Prepaid Rent, $2,000.
d) Debit Rent Expense, $12,000; Credit Prepaid Rent, $12,000.
Problem 3: An asset cost $50,000, an estimated salvage value of $1,500, and an estimated useful life of 8 years. What is the double-declining-balance depreciation rate?
a) 20.0% b) 25.0% c) 16.0% d) 32.5%
Problem 4: If year one equals $800, year two equals $840, and year three equals $880, the percentage to be assigned for year three in a trend analysis, assuming that year 1 is the base year, is
a) 110% b) 105% c) 95% d) 100%
Problem 5: "Transfers substantially all of the benefits and risks of ownership from the lessor to the lessee" defines a(n):
a) Operating lease
b) Contractual lease
c) Capital lease
d) Leveraged lease