Question : 137.Granite Company purchased a machine costing $120,000, terms 1/10, n/30. : 1258932

 

 

137.Granite Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,000. The machine requires special mounting and wiring connections costing $10,000. When installing the machine, $1,300 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.    

A.$129,800.

 

B.$132,100.

 

C.$130,800.

 

D.$118,800.

 

E.$120,100.

Cost of Machine = ($120,000 * .99) + $2,000 + $10,000 = $130,800

 

 

 

138.Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the straight-line method.    

A.$16,900.

 

B.$16,000.

 

C.$17,400.

 

D.$18,379.

 

E.$20,880.

Depreciation Expense = (Cost – Salvage Value)/Estimated Useful LifeDepreciation Expense = ($87,000 – $7,000)/5 = $16,000

 

 

 

139.Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the double-declining-balance method.    

A.$16,900.

 

B.$16,000.

 

C.$17,400.

 

D.$18,379.

 

E.$20,880.

Depreciation Expense = Book Value * Double Straight-line Rate Depreciation Expense = $87,000 * (2 * 20%) = $34,800 (Depreciation Expense, year 1) Depreciation Expense = Book Value * Double Straight-line Rate Depreciation Expense = ($87,000 – $34,800) * (2 * 20%) = $20,880 (Deprec. Exp, year 2)

 

 

 

140.Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the units-of-production method.    

A.$16,900.

 

B.$16,000.

 

C.$17,400.

 

D.$18,379.

 

E.$20,880.

Depreciation Expense = [(Cost – Salvage Value)/Estimated Useful Life (in units)] * Production of UnitsDepreciation Expense = [($87,000 – $7,000)/400,000] * 84,500 = $16,900

 

 

 

141.Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. What journal entry would be needed to record the machines’ second year depreciation under the units-of-production method?   

A.Debit Depletion Expense $16,900; credit Accumulated Depletion $16,900.

 

B.Debit Depletion Expense $16,000; credit Accumulated Depletion $16,000.

 

C.Debit Depreciation Expense $16,900; credit Accumulated Depreciation $16,900.

 

D.Debit Depreciation Expense $16,000; credit Accumulated Depreciation $16,000.

 

E.Debit Amortization Expense $16,900; credit Accumulated Amortization $16,900.

Depreciation Expense = [(Cost – Salvage Value)/Estimated Useful Life (in units)] * Production of UnitsDepreciation Expense = [($87,000 – $7,000)/400,000] * 84,500 = $16,900

 

 

 

142.Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines’ first year depreciation under the straight-line method.   

A.$27,000.

 

B.$29,025.

 

C.$25,800.

 

D.$23,779.

 

E.$24,000.

Depreciation Expense = (Cost – Salvage Value)/Estimated Useful LifeDepreciation Expense = ($135,000 – $15,000)/5 = $24,000

 

 

 

143.Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines’ first year depreciation under the double-declining-balance method.   

A.$66,000.

 

B.$54,000.

 

C.$24,000.

 

D.$25,800.

 

E.$48,000.

Depreciation Expense = Book Value * Double Straight-line RateDepreciation Expense = $135,000 * (2 * 20%) = $54,000 (Depreciation Expense, year 1)

 

 

 

144.Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines’ first year depreciation under the units-of-production method.   

A.$27,000.

 

B.$54,000.

 

C.$24,000.

 

D.$25,800.

 

E.$48,000.

Depreciation Expense = [(Cost – Salvage Value)/Estimated Useful Life (in units)] * Production of UnitsDepreciation Expense = [($135,000 – $15,000)/300,000] * 64,500 = $25,800

 

 

 

145.Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. What journal entry would be needed to record the machines’ first year depreciation under the units-of-production method?   

A.Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800.

 

B.Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025.

 

C.Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025.

 

D.Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800.

 

E.Debit Amortization Expense $24,000; credit Accumulated Amortization $24,000.

Depreciation Expense = [(Cost – Salvage Value)/Estimated Useful Life (in units)] * Production of UnitsDepreciation Expense = [($135,000 – $15,000)/300,000] * 64,500 = $25,800

 

 

 

146.Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined.    

A.$1,233,100.

 

B.$1,358,500.

 

C.$1,300,000.

 

D.$1,180,000.

 

E.$1,280,000.

Depletion Expense = [(Cost – Salvage Value)/Estimated Useful Life (in tons)] * Tons Mined Depletion Expense = [($5,900,000 + $600,000 – $0)/2,000,000] * 418,000 = $1,358,500