Print Co. paid $50,000 for a new priming press. In addition, they paid installat

Question

Print Co. paid $50,000 for a new priming press. In addition, they paid installation costs of $3,000. Before the printing press could be put into production it had to undergo testing and alignment procedures at a cost of $7,000. To pay for the press, the company signed a 1 year note which required interest payments of $2,000. The cost added to the Equipment account is; $50,000 $59,000 $60,000 $62,000 On July 15, 2014, GreenForest Co. bought rights to a gravel pit for $500,000. An additional $100,000 was spent to develop the site. The gravel pit if expected to produce an estimated 800,000 tons of gravel and will have no salvage value. During 2014, 200,000 tons of gravel was extracted and 160,000 tons were sold. The depletion expense (cost of goods sold) recorded for 2014 would be: $ 80,000 $ 100,000 $ 120,000 $ 150,000 Rock and Paper are partners and have capital balances at the beginning of the year of $40,000 and $50,000, respectively. They divide income according to the partnership agreement as follows: Salary allowances of $8,000 and $15,000 respectively Interest of 10% on beginning of year capital balance Remaining amount in the ratio of 1:3 If net income for the year was $60,000, what would be Rock's share $19,000. $41,000. $48,000. $65,000.

Explanation / Answer

Depreciation for second year Depreciation Rate Cost- Salvage/ Life (200000-20000)/5 36000 Rate 36000/180000 20% Year Value Depreciation 1 200000 80000 (200000*40%) 2 120000 48000 The correct option is C. $ 48000 30 The cost would be Printing Press 50000 Installation 3000 Testing 7000 Total Cost 60000 The correct option is C. $ 60000

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