WGU D103 Pre-Assessment: Intermediate Accounting
I Units 5-7 (JMV1) (PJMV) | Questions with 100%
Correct ANSWERs | Verified | Latest Update
Company A sells a parcel of land to Company B in exchange for a note receivable. The
terms of the note require Company B to make a single payment of $600,000 in two
years. Using a 10% interest rate, the implied annual interest is $600,000 × 0.10 =
$60,000, and the present value of the note is $600,000 × 0.82645 = $495,870. Which
amount must Company A consider as the proceeds from the sale of the land in order to
calculate gross profit or gain/loss on the sale in accordance with generally accepted
accounting principles (GAAP)? - ANSWER -$495,870
A company performs services for a customer in exchange for a noninterest-bearing
note. The customer agrees to make a payment of $100,000 in three years. Using a 5%
interest rate, the implied annual interest is $100,000 × 0.05 = $5,000, and the present
value of the note is $100,000 × 0.86384 = $86,384. Which amount must this company
record as service revenue from this transaction in accordance with generally accepted
accounting principles (GAAP)? - ANSWER -$86,384
A company will receive $10,000 each year in lease payments for the next five years.
The payments will start at the end of the first year. Assuming an annual interest rate of
4% is appropriate, the present value of an ordinary annuity is 4.45182 × $10,000 =
$44,518, and the present value of an annuity due is 4.62989 × $10,000 = $46,299.
Which amount should be recorded for this sale? - ANSWER -$44,518
A student has saved $40,000 to take a year to study abroad. The cash was deposited
into a money market account earning 2% monthly interest for 12 months. The student
wants to withdraw equal amounts each month at the end of the month for living
expenses. Assuming a monthly interest rate of 2% is appropriate, the present value of
an ordinary annuity is $40,000/10.57534 = $3,782.38, and the present value of an
annuity due is $40,000/10.78685 = $3,708.22. What is the amount that this student
should withdraw each month? - ANSWER -$3,782.38
A company has the following items:
Cash $ 10,000
Petty cash $ 100
Short term paper $ 1,500
Post dated customer check $ 2,000
Bank overdraft $ 50
, How much should be recorded as cash equivalents? - ANSWER -$1,500
short term paper
A company has the following account balances as of December 31:
trade receivables: $100,000
current notes receivable: $200,000
other receivables (due in six months): $20,000
allowance for doubtful accounts: $20,000
Which amount should be reported as net receivables under current assets on the
balance sheet? - ANSWER -$300,000
trade receivables + current notes receivables
A company uses the net method to record a sale of $500 on 6/18 with terms of 2/10,
net 30 and the discount is expected to be taken. Payment is received on 6/30. How is
accounts receivable recorded on 6/30? - ANSWER -Credited for $490
Net Method recognizes discounts at the point of sale.
6/18 sale:
Accts. Rec. $490
Sales Rev. $490
6/30 payment:
Cash $490
Accts. Rec. $490
The December 31, 2019, trial balance for a company reported a $100,000 debit
balance in accounts receivable. Management estimates that 10% of accounts
receivable may not be collected. Prior to year-end adjustment, there was a $1,000 credit
balance in the allowance for doubtful accounts.What net realizable value of accounts
receivable will be reported on this company's December 31, 2019, balance sheet? -
ANSWER -$90,000
$100,000 x .10 = $10,000
$100,000 - $10,000 = $90,000
A company uses the allowance method for uncollectible accounts. On November 10,
2019, the company wrote off a customer's $4,000 account receivable. The company
received payment in full from the customer on December 1, 2019. Which entry or
entries should this company record on December 1? - ANSWER -Debit accounts
receivable for $4,000; credit allowance for doubtful accounts for $4,000
Debit cash for $4,000; credit accounts receivable for $4,000
I Units 5-7 (JMV1) (PJMV) | Questions with 100%
Correct ANSWERs | Verified | Latest Update
Company A sells a parcel of land to Company B in exchange for a note receivable. The
terms of the note require Company B to make a single payment of $600,000 in two
years. Using a 10% interest rate, the implied annual interest is $600,000 × 0.10 =
$60,000, and the present value of the note is $600,000 × 0.82645 = $495,870. Which
amount must Company A consider as the proceeds from the sale of the land in order to
calculate gross profit or gain/loss on the sale in accordance with generally accepted
accounting principles (GAAP)? - ANSWER -$495,870
A company performs services for a customer in exchange for a noninterest-bearing
note. The customer agrees to make a payment of $100,000 in three years. Using a 5%
interest rate, the implied annual interest is $100,000 × 0.05 = $5,000, and the present
value of the note is $100,000 × 0.86384 = $86,384. Which amount must this company
record as service revenue from this transaction in accordance with generally accepted
accounting principles (GAAP)? - ANSWER -$86,384
A company will receive $10,000 each year in lease payments for the next five years.
The payments will start at the end of the first year. Assuming an annual interest rate of
4% is appropriate, the present value of an ordinary annuity is 4.45182 × $10,000 =
$44,518, and the present value of an annuity due is 4.62989 × $10,000 = $46,299.
Which amount should be recorded for this sale? - ANSWER -$44,518
A student has saved $40,000 to take a year to study abroad. The cash was deposited
into a money market account earning 2% monthly interest for 12 months. The student
wants to withdraw equal amounts each month at the end of the month for living
expenses. Assuming a monthly interest rate of 2% is appropriate, the present value of
an ordinary annuity is $40,000/10.57534 = $3,782.38, and the present value of an
annuity due is $40,000/10.78685 = $3,708.22. What is the amount that this student
should withdraw each month? - ANSWER -$3,782.38
A company has the following items:
Cash $ 10,000
Petty cash $ 100
Short term paper $ 1,500
Post dated customer check $ 2,000
Bank overdraft $ 50
, How much should be recorded as cash equivalents? - ANSWER -$1,500
short term paper
A company has the following account balances as of December 31:
trade receivables: $100,000
current notes receivable: $200,000
other receivables (due in six months): $20,000
allowance for doubtful accounts: $20,000
Which amount should be reported as net receivables under current assets on the
balance sheet? - ANSWER -$300,000
trade receivables + current notes receivables
A company uses the net method to record a sale of $500 on 6/18 with terms of 2/10,
net 30 and the discount is expected to be taken. Payment is received on 6/30. How is
accounts receivable recorded on 6/30? - ANSWER -Credited for $490
Net Method recognizes discounts at the point of sale.
6/18 sale:
Accts. Rec. $490
Sales Rev. $490
6/30 payment:
Cash $490
Accts. Rec. $490
The December 31, 2019, trial balance for a company reported a $100,000 debit
balance in accounts receivable. Management estimates that 10% of accounts
receivable may not be collected. Prior to year-end adjustment, there was a $1,000 credit
balance in the allowance for doubtful accounts.What net realizable value of accounts
receivable will be reported on this company's December 31, 2019, balance sheet? -
ANSWER -$90,000
$100,000 x .10 = $10,000
$100,000 - $10,000 = $90,000
A company uses the allowance method for uncollectible accounts. On November 10,
2019, the company wrote off a customer's $4,000 account receivable. The company
received payment in full from the customer on December 1, 2019. Which entry or
entries should this company record on December 1? - ANSWER -Debit accounts
receivable for $4,000; credit allowance for doubtful accounts for $4,000
Debit cash for $4,000; credit accounts receivable for $4,000
