7. A company receiving a donated asset will record:
a. an increase in revenue
b. an increase in liabilities
c. a decrease in liabilities
d. an increase in revenue and a decrease in liabilities
8. Alamos Co. exchanged equipment and $17,500 cash for similar equipment. The book value and the fair value of the old equipment were $81,800 and $90,300, respectively.
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
a.$0
b. $8,500
c. $26,000
d. $(8,500)
9. On January 1, 2018, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
January 1, 2018 $ 200,000 September 1, 2018 $ 300,000 December 31, 2018 $ 300,000 March 31, 2019 $ 300,000 September 30, 2019 $ 200,000
Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2018. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2018 and 2019.
Average accumulated expenditures for 2018 was:
a. $300,000
b. $350,000
c. $500,000
d. $400,000
10. On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
January 1, 2018 $ 323,000 September 1, 2018 $ 483,000 December 31, 2018 $ 483,000 March 31, 2019 $ 483,000 September 30, 2019 $ 323,000
Dreamworld had $6,100,000 in 15% bonds outstanding through both years.
Dreamworld's capitalized interest in 2018 was:
a. $84,712
b. $48,450
c. $72,600
d. $96,900
11. Software development costs are capitalized if they are incurred:
a. Prior to the point at which technological feasibility has been established.
b. after commercial production has begun
c.After technological feasibility has been established but prior to the product availability date.
d. none of these answers
12.Cebrex Software began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The economic life of the software is estimated at four years. For what amount will software be capitalized in 2018?
a. $0
b. $5,600,000
c. $1,400,000
d. $3,200,000
7. A company receiving a donated asset will record:
a. an increase in revenue
b. an increase in liabilities
c. a decrease in liabilities
d. an increase in revenue and a decrease in liabilities
8. Alamos Co. exchanged equipment and $17,500 cash for similar equipment. The book value and the fair value of the old equipment were $81,800 and $90,300, respectively.
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
a.$0
b. $8,500
c. $26,000
d. $(8,500)
9. On January 1, 2018, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
| January 1, 2018 | $ | 200,000 | |
| September 1, 2018 | $ | 300,000 | |
| December 31, 2018 | $ | 300,000 | |
| March 31, 2019 | $ | 300,000 | |
| September 30, 2019 | $ | 200,000 | |
Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2018. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2018 and 2019.
Average accumulated expenditures for 2018 was:
a. $300,000
b. $350,000
c. $500,000
d. $400,000
10. On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
| January 1, 2018 | $ | 323,000 | |
| September 1, 2018 | $ | 483,000 | |
| December 31, 2018 | $ | 483,000 | |
| March 31, 2019 | $ | 483,000 | |
| September 30, 2019 | $ | 323,000 | |
Dreamworld had $6,100,000 in 15% bonds outstanding through both years.
Dreamworld's capitalized interest in 2018 was:
a. $84,712
b. $48,450
c. $72,600
d. $96,900
11. Software development costs are capitalized if they are incurred:
a. Prior to the point at which technological feasibility has been established.
b. after commercial production has begun
c.After technological feasibility has been established but prior to the product availability date.
d. none of these answers
12.Cebrex Software began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The economic life of the software is estimated at four years. For what amount will software be capitalized in 2018?
a. $0
b. $5,600,000
c. $1,400,000
d. $3,200,000
Related questions
Eli Enterprises has just completed its first full year of operations on December 31, 2018. It provides accounting services to not-for-profit organizations. The unadjusted (normal) trial balance is presented below:
| Eli Enterprises | |||||
| Trail Balance â unadjusted (normal) | |||||
| As of December 31, 2018 | |||||
| Account Title | Debit | Credit | |||
| Cash | $ 20,000 | $ . | |||
| Accounts Receivable | 50,000 | ||||
| Supplies | 5,000 | ||||
| Prepaid Rent | 7,200 | ||||
| Equipment | 200,000 | ||||
| Notes Payable | 75,000 | ||||
| Accounts Payable | 15,000 | ||||
| Unearned Service Revenues | 12,000 | ||||
| Common Stock | 100,000 | ||||
| Retained Earnings | 50,000 | ||||
| Dividends | 1,300 | ||||
| Service Revenues | 800,000 | ||||
| Salaries Expenses | 700,000 | ||||
| Advertising Expense | 50,000 | ||||
| Utilities Expenses | 18,500 |
| |||
| Total | $ 1,052,000 | $ 1,052,000 | |||
An analysis of the firmâs records reveals the following:
a. Equipment purchased January 1, 2018, has an estimated life of ten years.
b. Utilities expense does not include the expense for December, estimated at $1,650. The bill will not arrive until January, 2019.
c. The balance in Prepaid Rent represents the amount paid for a three-year insurance beginning on January 1, 2018.
d. On July 1, 2018, management borrowed $ 75,000 on a two-year note paying interest of four percent each year.
e. On September 25, 2018, management received $ 12,000 (unearned service revenues) to perform services from October 1, 2018 through June 30, 2019, nine months.
Required: Prepare adjusting entries in journal entry form.
