Multiple choice. Select the correct letter.

1. An oil well cost $2,030,000 and is calculated to hold 250,000 barrels of oil. There is no residual value. Which journal entry is needed to record the expense for the extraction of 55,000 barrels of oil during the year? All 55,000 barrels were sold during the year. (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A)

Depletion Expense - Oil Reserve	446,600
Oil Revenue		446,600

B)

Cost of Goods Sold - Oil Reserve	446,600
Accumulated Depletion - Oil Reserve		446,600

C)

Depletion Expense - Oil Reserve	446,600
Accumulated Depletion - Oil Reserve		446,600

D)

Oil Reserve Inventory	446,600
Accumulated Depletion - Oil Reserve		446,600

2 Brad's gross pay for the month is $15,400. His deduction for federal income tax is based on a rate of 18%. He has no voluntary deductions. His year-to-date pay is under the limit for OASDI. What is Brad's net pay? (Assume a FICAOASDI Tax of 6.2% and FICAMedicare Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

A) $11,450 B) $15,400 C) $12,628 D) $14,222

3.) Analyze the following independent situations. Required: For each situation, state the likelihood of a future event and state how the contingency will be reported.

a. Company A estimates it will have to pay $85,000 in warranty repairs next year.

b. Company B is being sued by a customer. Company B's attorneys feel that this is a frivolous lawsuit and there is very little chance that the customer will win.

c. Company C co-signed a note payable for Company D. Company D is having serious financial problems and it is reasonably possible that Company C will have to pay the note.

d.Company E is being sued for a patent infringement. Company E's attorney feels that Company E will be found liable for damages caused by the patent infringement. However, the attorney states it is not possible to estimate the amount of the award.

4.20) On July 1, 2019, Reliable Services issued $39,000 of 15% bonds that mature in five years for $64,000. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2019, what is the total amount paid to bondholders?

A) $5850 B) $4800 C) $9600 D) $2925