Question : 131. Carmel Company acquires a mineral deposit at a cost of : 1225154

131. Carmel 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. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined? 

A. Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100.

B. Debit Amortization Expense $1,358,500; credit Accumulated Amortization $1,358,500.

C. Debit Depreciation Expense $1,358,500; credit Accumulated Depreciation $1,358,500.

D. Debit Depletion Expense $1,358,500; credit Accumulated Depletion $1,358,500.

E. Debit Depreciation Expense $1,233,100; credit Accumulated Depreciation $1,233,100.

132. Monte Ray leases office space for $7,000 per month. On January 3, Monte Ray incurs $75,000 to improve his leased office space. These improvements are expected to yield benefits for 8 years. Ray has 6 years remaining on his lease. Compute the amount of expense that should be recorded the first year related to the improvements. 

A. $19,500.

B. $7,000.

C. $12,500.

D. $9,375.

E. $16,375.

133. Monte Ray leases office space for $7,000 per month. On January 3, Monte Ray incurs $75,000 to improve his leased office space. These improvements are expected to yield benefits for 8 years. Ray has 6 years remaining on his lease. What journal entry would be needed to record the expense for the first year related to the improvements? 

A. Debit Amortization Expense $12,500; credit Accumulated Amortization $12,500.

B. Debit Depletion Expense $12,500; credit Accumulated Depletion $12,500.

C. Debit Depreciation Expense $12,500; credit Accumulated Depreciation $12,500.

D. Debit Depletion Expense $9,375; credit Accumulated Depletion $9,375.

E. Debit Amortization Expense $9,375; credit Accumulated Amortization $9,375.

134. Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale. 

A. $3,500 loss.

B. $5,500 gain.

C. $5,500 loss.

D. $3,000 gain.

E. $3,500 gain.

135. Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale. The journal entry to record the disposal of the asset would involve all of the following except: 

A. Debit Accumulated Depreciation $64,000.

B. Credit Equipment $93,500.

C. Debit Loss on Disposal of Equipment $3,500.

D. Credit Gain on Disposal of Equipment $3,500.

E. Debit Cash $33,000.

136. Cambria Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover. 

A. 1.31.

B. 2.02.

C. 13.

D. 76.

E. 50.

137. Big River Rafting pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $105,000, a building appraised at $210,000, and equipment appraised at $35,000. Compute the cost that should be allocated to the building. 

A. $93,000.

B. $186,000.

C. $32,500.

D. $195,000.

E. $97,500.

138. Big River Rafting pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $105,000, a building appraised at $210,000, and equipment appraised at $35,000. Compute the cost that should be allocated to the land. 

A. $93,000.

B. $186,000.

C. $32,500.

D. $195,000.

E. $97,500.