Which type of company converts raw materials into finished products?

A. Not-for-profit

B. Service

C. Merchandising

D. Manufacturing

Choose the correct answer for the below:

Prepaid accounts (also called prepaid expenses) are generally:

A) Payments made for products and services that never expire.

B) Classified as liabilities on the balance sheet.

C) Classified as equity on the balance sheet.

D) Assets that represent prepayments of future expenses.

E) Promises of payments by customers.

On October 1, Eder Fabrication borrowed $60 million and issued a nine-month promissory note.

Interest was discounted at issuance at a 12% discount rate.

Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period.

A flash flood swept through Dad, Inc.’s warehouse on May 1. After the flood, Dad’s accounting records showed the following:

What amount of inventory was lost in the flood?

A. $55,000

B. $85,000

C. $120,000

D. $150,000

Equipment was purchased for $90,000. Freight charges amounted to $4,200 and there was a cost of $12,000 for building a foundation and installing the equipment. It is estimated that the equipment will have $18,000 salvage value at the end of its 5-year useful life. What will be the depreciation expense each year using the straight-line method?