9. A factory mac hine was purchased for $90,000 on January 1,2011. It was estima
ID: 2566104 • Letter: 9
Question
9. A factory mac hine was purchased for $90,000 on January 1,2011. It was estimated that it would have a It was also estimated that the machine would . If the be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 201 company uses the units-of-activity method of depreciation, the amount of depreciation expense would be A) $7,200 B) $14,400 C) $18,000 D) $9,000 for 2 011 50. If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is A) $27,500. B) $20,500 C) $28,500. D) $43,500. 51. The book value of a plant asset is always equal to its fair market value. A) True B) False 52. If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method. A) True B) False 53. Depreciation is a process of A) cost accumulation B) cost allocation. C) asset valuation. D) asset devaluation.Explanation / Answer
49) Depreciation for 2011 is 4000/40000*($90000-$18000)= A) $7200
50) correct balance in bank account is C) $28500
As per month end bank statement= $36000
Less: outstanding checks = $12000
Add: deposit= $4000
Add: check erroneously charged $500
Correct balance $ 28500
51) B) false as book value is purchase price less depreciation while fair market value is determined according to market conditions.
52) A) True as cost of good sold is higher when inventory with high prices are considered first and accordingly gross profit reduced.
53) B) Cost allocation.
43) Net sales = Sales less sales returns and allowance less sales discounts
= $16200 -$600-$300
= C) $15300
44) Cost of land is purchase price + brokers' commission+ cost of demolition
= $70000+ $5000+$7000
= A) $82000
45) D) debit of $5000 to Notes Receivable.
46) A) True
47) A) True
48) C) Lower of cost or market
34) C) Debit to Bad Debts Expense of $7900
35) A) True
36) A) True
37) A) True
38) A) Amortisation
39) D) Debit notes Receivable for the face value of Note.
40) A) that is identified on the formal instrument of credit.
41) D) LIFO as gross profit is less and accordingly incometax expense is less.
42) D) they have been insured against misappropriation of assets.
28) Acquisition cost of the equipment is $22500+ $1800+$320+$430
C) $25050
29) B) False
30) correct balance of cash account is $45000+ $940-$320-$90 ($540-$450)+$18 ($97-$79)
D) $45548
31) B) Perpetual Inventory Systems require more detailed inventory records.
32) D) Land Improvements
33) B) cash (net) Realizable Value
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.