On January 1, 2014, Rowley Company purchased a truck that cost $37,000. The truc

Question

On January 1, 2014, Rowley Company purchased a truck that cost $37,000. The truck had an expected useful life of 4 years and a $3,000 salvage value. The amount of depreciation expense recognized in 2014 assuming that Rowley uses the double declining balance method is:

$18,500.

$8,500.

$17,000.

$9,250.

On March 1, Bunker Hill Company purchased a new stamping machine with a list price of $86,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $2,900; sales tax paid, $6,320; installation costs, $1,800; routine maintenance during the first month of operation, $2,800. The cost recorded for the machine was:

$81,700.

$95,520.

$90,920.

$92,720.

Sandusky Company borrowed $13,000 from the Lakeside Bank by issuing a 11% four-year installment note. Sandusky agreed to repay the principal and interest by making annual payments in the amount of $4,190.24. Based on this information, the amount of the interest expense associated with the second payment would be: (round your answer to the nearest dollar)

$1,430.

$1,126.

$466.

$1,397.

On January 1, 2014, Rugh Company purchased equipment with a list price of $32,000 with a 2% cash discount. The equipment was delivered under terms of FOB destination and freight costs amounted to $900. A total of $6,000 was paid for installation and testing. During the first year, Rugh paid $850 for insurance on the equipment and another $750 for routine maintenance and repairs. Rugh uses the units-of-production method of depreciation. Useful life is estimated at 5 years or 500,000 units and estimated salvage value is $2,000. During 2014, the equipment produced 100,000 units. What is the amount of depreciation for 2014?

$7,472

$7,652

$6,272

$7,072

When does warranty cost appear on the statement of cash flows?

None of these.

When the warranty obligation is recognized.

When merchandise is sold.

When there is a settlement of a warranty claim made by a customer.

At the end of the current accounting period, Washta Co. recorded depreciation of $25,000 on its equipment. The effect of this entry on the company's balance sheet is to:

decrease owners' equity and increase liabilities.

decrease owners' equity and decrease assets.

decrease assets and increase owners' equity.

decrease assets and increase liabilities.

Explanation / Answer

1. 37000*50%=18500

depreciation rate as per slm 100/4=25

deprecition rate as per double declinining balace=25*2=50

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