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
