1. A truck that cost $42,000 and on which s35,000 of accumulated depreciation ha
ID: 2566105 • Letter: 1
Question
1. A truck that cost $42,000 and on which s35,000 of accumulated depreciation has been recorded was disposed of for $10,500 cash. The entry to record this event would include a A) loss of $3,500. B) credit to the Truck account for $7,000. C) credit to Accumulated Depreciation for $35,000. D) gain of $3,500. 2. The interest on a $4,000, 6%, 60-day note receivable is A) $120. B) $80. C) $240. D) $40. 3. If disposal of a plant asset occurs during the year, depreciation is A) B) C) D) recorded for the fraction of the year to the date of the disposal. recorded for the whole year. not recorded for the year. not recorded if the asset is scrapped. (4 On July 1, 2011, Hale Kennels sells equipment for $66,000. The equipment originally cost $180,000 had an estimated 5-year life and an expected salvage value of $30,000. The accumulated depreciation account had a balance of $105,000 on January 1, 2011, using the straight-line method. The gain or loss on disposal is A) $6,000 gain. B) $9,000 gain. C) $6,000 loss. D) $9,000 loss. 5. Depreciation is the process of allocating the cost of a plant asset over its service life in A) B) C) D) an accelerated and accurate manner. a systematic and rational manner. a conservative market-based manner. an equal and equitable manner. 6. Yanik Company's delivery truck, which originally cost $56,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $38,000. The company received $32,000 reimbursement from its insurance company. The gain or loss as a result of the fire was A) $24,000 loss. B) $14,000 gain. C) $24,000 gain. D) $14,000 loss. Page 1Explanation / Answer
Solution 1:
Cost of Truck is 42,000
Accumulated dep is 35,000
Truck was disposed off at 10,500
so Journal entry will be
Cash 10,500
Acc dep 35,000
Truck 42,000
Gain on sale of truck 3,500
So this transaction will include a gain of 3,500
Correct answer is D.
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