Choco company switched from the sum of the years digits (SYD) depreciated method

Question

Choco company switched from the sum of the years digits (SYD) depreciated method to straight line depreciated in 2013. The change affects machinery purchased at the beginning of 2011 at a cost of $94,000. The machinery has an estimated of five years and an estimated residual value of $4,000. The accumulated depreciation of the machinery since the actuation in 2011 and in 2012 has been $54,000. What is choco 2013 depreciation (Find the closest number)? $9, 120. $12,000. $13,333. $36,000 In 2013 internal auditors discovered that choco, inc, had detected an expense account for the $500,000 cost of a machine purchased on January 1,2010. The machine's useful was expected to be five years with no residual value. Straight line depreciation is used by choco. The journal entry to correct the error will include a credit to accumulated depreciation . $100,000. $200,000. $300,000. $500,000. Choco company's income statement contained the following errors: Ending inventory, December 31,2013, understand by $7,000 Depreciation expense for 2013 overstated by $2,000 What is the effect of the errors on 2013 net income before taxes? Overstated by $5,000. Understated by $5,000. Overstated by $9,000. Understated by $9,000. A from reported salary expense of$400,000 for the current year. The beginning and ending balance in salaries payable were $50,000 and $10,000, respectively. What was the amount of cash paid for salaries? $40,000. $360,000. $440,000. $460,000. Choco Company's accounting records includes the following information Payments to suppliers $100,000. Collections on accounts receivable 120,000 Cash sales 40,000 What is the amount of net cash provided by operating activities indicated by the amounts provided? $20,000. $60, 000. $180,000. $260,000.

Explanation / Answer

a) Cost of machine $   94,000 Salvage value $     4,000 Basis $   90,000 Accumlated depreciation for two years $   54,000 Book value as at end of 12/31/2012 $   36,000 Life left 3 Depreciation for 2013 $   12,000 b) Cost of machine $ 500,000 Useful life 5 depreciation $ 100,000 Journal entry to correct the error will include the credit to deprication of 500000 - 2 x 100000 $ 300,000 c) Understated of ending inventory $     7,000 Overstated of depreciation $     2,000 Understated of income statement $     5,000 d) Salary Expense $400,000 Salary payable = 50000-10000 $ 40,000 Cash paid for salaries $440,000 e) Cash Sales $ 40,000 Collection in accounts receivable $120,000 less : Payment to suppliers $100,000 Net cash from operations $ 60,000

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