15 4 questions 1 on may 1 san diego company paid 36 000 for rent the rent covers the 4307858

15.4   Questions

1) On May 1, San Diego Company paid $36,000 for rent.  The rent covers the period May 1 through August 31.  San Diego Company recorded Prepaid Rent of $36,000.  What is the balance in the Prepaid Rent account on July 1?

A) $0

B) $9,000

C) $18,000

D) $27,000

2) On May 1, San Jose Company paid $36,000 for rent.  The rent covers the period May 1 through August 31.  San Jose Company recorded Prepaid Rent of $36,000.  What is the Rent Expense for the month of May?

A) $0

B) $9,000

C) $18,000

D) $27,000

3) On January 1, Laguna Company paid $16,000 for rent.  The rent covers the period January 1 through April 30.  Laguna Company recorded Prepaid Rent of $16,000.  What is the balance in the Prepaid Rent account on March 1?

A) $4,000

B) $8,000

C) $12,000

D) $16,000

4) On July 1, Gabriel Company paid 6 months' insurance in advance.  The policy covers the period of July 1 through December 31.  The total payment was $5,400.  At the time of the payment, the company set up the Prepaid Insurance account for $5,400.  What is the balance in the Prepaid Insurance account on September 30?

A) 0

B) $1,800

C) $2,700

D) $3,600

5) San Francisco Company paid $2,700 for 6 months' insurance, covering the period of April 1 to September 30.  At the time of the payment, the entire amount was used to increase the balance in the Prepaid Insurance account.  The balance in the Prepaid Insurance account on April 30 is ________.

A) $0

B) $900

C) $1,800

D) $2,250

6) Under accrual basis accounting, unexpired costs are considered to be ________.

A) expenses if cash has been paid

B) expenses if cash has not been paid

C) assets

D) accrued liabilities

7) Under accrual basis accounting, research and development expenses for new products are recorded as ________.

A) assets and written off systematically over the expected life

B) assets and expensed when paid in cash

C) assets and expensed when the related products are sold

D) expenses immediately

8) Depreciation expense is computed on ________.

A) equipment and land

B) land and buildings

C) equipment and buildings

D) equipment, land and building

9) On January 1, 2010, New Mexico Company acquired a machine for $33,000. Annual depreciation expense equals $3,000.  The residual value of the machine is $3,000.  What is the book value of the machine on December 31, 2010?

A) $3,000

B) $27,000

C) $30,000

D) $33,000

10) Oakland Company owns a fixed asset with an original cost of $100,000.  The company estimates it will use the fixed asset for 5 years, at which time the fixed asset will be sold for $10,000.  The annual depreciation expense is ________.

A) $0

B) $10,000

C) $18,000

D) $20,000