ACCT 304 Week 4 Quiz

ACCT 304 Week 4 Quiz

1. (TCO 5) Slick’s Used Cars sells pre-owned cars on an installment basis and carries its own notes because its customers typically cannot qualify for a bank loan. Default rates tend to be high or unpredictable. However, in the event of nonpayment, Slick’s can usually repossess the cars without loss. The revenue method Slick would use is the

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2. (TCO 5) On December 15, 2011, Rigsby Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal annual installments, payable on December 15, 2012 and December 15, 2013. Ignore interest charges. Rigsby has a December 31 year-end.

In 2012, Rigsby would recognize the realized gross profit of

3. (TCO 6) Present and future value tables of $1 at 3% are presented below:

Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 5 years from now. How much must Carol deposit to accomplish her goal?

4. (TCO 6) Sondra deposits $2,000 in an IRA account on April 15, 2011. Assume the account will earn 3% annually. If she repeats this for the next 9 years, how much will she have on deposit on April 14, 2020?

5. (TCO 6) Micro Brewery borrows $300,000 to be paid off in 3 years. The loan payments are semiannual, with the first payment due in 6 months, and interest is at 6%. What is the amount of each payment?