$2,600 in the Other Accounts Dr. column $2,600 in the Cash Cr. column A) $1,700
ID: 2587162 • Letter: #
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$2,600 in the Other Accounts Dr. column $2,600 in the Cash Cr. column A) $1,700 in the Accounts Receivable Dr /Sales Cr colume and B) $2,600 in the Accounts Receivable Dx Sales Cr. column and C) 52,600 in the Accounts Receivable Dr Sales D) S1,700 in the Accounsts E) $2,600 in the Accounts Receivable Dr/Sales Cr. Cr. column and $1,700 in the Cost of Goods Sold Dr Receivable Dr/Sales Cr.column and $2,600 in the Cost of Goods Sold Dr /Inventory Cr. column column and $1,700 in the Accounts Payable Dr/Purchases Cr.column 7) Wickland Company installs machine's useful life is estimated to be 5 years, or 400,000 units of product, machine produces 84,500 units of a manufacturing machine in its production facility at the beginning of the year af a cost of $37,000. The with a $7,000 salvage value. During its second year, the product. Determine the machines' second year depreciation ander the straight-line method. 7) A) $16,900B) 20,880. C$18379 D)16,00 E17,400 a manufacturing machine in its peoduction facility at the beginning of the year at a cost of $87,000. The t ,000 units of product, with a $7,000 salvage value. During its second year, the 8) Wickland Company installs machines useful life esti machine produces 84,500 wnits of product. Detcrmine the machines' second year depreciation under the double-declining-balanke method. 8) A) s20,880. B) S17,400 C)16,000 D) $18,379. E)SI6.900. 9) A machine costing $75,000 is parchased on September , Year 1. The machine is estimated to have a salvage value of $10,000 and sold on December 31, Year 3 for an estimated useful life of 4 years. Double-declining-balance depreciation is used. If the machine is $13,000, the journal entry to record the sale will inclade:9) A) A debit to loss on sale for $3,042. B) A credit to gain on sale for $8,000. C) A debit to loss on sale for $2,625 D) A credit to gain on sale for $4,979 E) A credit to accumulated depreciation for S59,37. 10) Revenue expenditures: 10) A) Extend the asset's useful life. B) Substantially benefit future periods C) Are debited to asset accounts when incurred D) Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. E) Are known as balance sheet expenditures because they relate to plant assets 11) A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the book value of the machine at the end of the second year? 11) A) $81,600. B) $144,400. C) $190,000 D) S108,400 E) $180,000 12) The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation late the asset's beginning-of-period book value is called:12) A) Straight-line depreciation. B) Units-of-production depreciationExplanation / Answer
7. Depreciation for the second year under straight line method = $(87,000 - 7,000) / 5 years
= 80,000 / 5 = $16,000
Correct answer is D.
8. Depreciation for second year under double declining method.
Depreciation for first year = 87,000 / 5 years x 2 = $34,800
Book value at end of first year = $87,000 - 34,800 = 52,200
Depreciation for second year = 52,200 / 5years x 2 = $20,880
Correct answer is A.
9. Calculation of Depreciation for 3 years.
Depreciation for 1st year = 75,000 / 4 x 2 = 37,500 / 12 x 4 = $12,500
Book value at end of year 1 = 75,000 - 12,500 = 62,500
Depreciation for 2 nd year = 62,500 / 4 x 2 = $31,250
Book value at end of year 2 = 62,500 - 31,250 = $31,250
Depreciation for 3rd year = 31,250 / 4 x 2 = $15,625
Book value at end of year 3 = $31,250 - 15,625 = $15,625
Sale value of asset = $13,000
Loss on sale of asset = $13,000 - 15,625 = $2,625
Correct answer is C.
10. Revenue expenditure are incurred to keep the asset in working conditions like annual maintenance cost etc. Therefore, these expenditures do not increase the asset's life or productive capabilities. Correct answer is D.
11. Calculation of Book value at end of second year.
Depreciation under units of production:
Depreciation Year 1 = ($190,000 - 10,000) / 75,000 x 15,000 = $36,000
Depreciation for Year 2 = (190,000 - 10,000) / 75,000 x 19,000 = $45,600
Book value at end of Year 2 = 190,000 - 36,000 - 45,600 = $108,400
Correct answer is D.
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