Question

32. Which of the following accounts is classified as a contra revenue account? A) Sales Revenue B) Cost of Goods Sold C) Sales Returns and Allowances D) Purchase Discounts 33. Ron's Quik Shop bought equipment for $70,000 on January 1, 2013. Ron estimated the useful life to be 5 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2014, Ron decides that the business will use the equipment for a total of 6 years. What is the revised depreciation expense for 2014? A) $9,333. B) $11,200. C) $5,600. D) $14,000. 34. Lackey Company wrote checks totaling $25,620 during October and $27,976 during November. $24,360 of these checks cleared the bank in October, and $27,330 cleared the bank in November. What was the amount of outstanding checks on November 30? A) $1,906. B) $916, c) $2,970. D) $346. 35. During January 2014, its first month of operation, Osborn Enterprises earned net income of $1,700 and paid dividends to the owners of $500. At January 31, the balance in Retained Earnings will be A) $1,200 credit. B) $500 debit. C) SO. D) $1,700 credit. 36. Which o the following should not be included in the physical inventory of a company? A) Goods held on consignment from another company B) Goods in transit from another company shipped FOB shipping point. C) Goods shipped on consignment to another company D) All of these answer choices should be included. Version 2 Page 8

Answer 1

Q32.
Answer is C. Sales return and allowance
Q33.
Answer is B. 11200
Annual depreciation initially =70000/5 = 14000
BV on 1.1.14= 70000-14000 = 56000
Annual depreciation for 2014 = 56000/5 = 11200
Q34.
Answer is A. 1906
Total checks written			53596
Less: Total cleared			51690
Checks outstanding			1906
Q35.
Answer is A. $1200 credit
Q36.
Answer is A. Goods held on consignment from another company