27. Glouchester Associates sold office equipment for cash ofS142,000. The accumu

Question

27. Glouchester Associates sold office equipment for cash ofS142,000. The accumulated depreciation at date ofsale amounted to S138,000, and a gain of$18,000 was recognized on the sale. The original cost ofthe asset must have been: $262,000 $260,000 $280,000 $156,000 a. d. 28. For the month ended January 31, Ponzi Plastic Co. hadnet sales of $100,000, total goods available for sale of $70,000, and an estimated gross profit percentage of40%. Ponzi's estimated inventory at the end ofJanuary is $10,000 $30,000 $40,000 $60,000 d. 29. The fair market value ofLewis Company's net identifiable assets is $5,000,000.Martin Corporation purchases Lewis' entire business for $5,800,000. Which ofthe following statements is not correct? a. Martin Corporation paid $800,000 for goodwill generated by Lewis Company. b. Martin feels that Lewis Company has the ability to generate eamings in excess of a nomalretum on net c. Martin will record amortization expense over a period not to exceed40 vears. d. Martin Corporation will record $800,000 to goodwill, anintangible asset, which will be reported in its identifiable assets. balance sheet 30. On March 1, 19X5, Curtis Corporation accepted a $20,000.6 month. 10% note on account from Glona Lawless. Assume that Gloria defaults on the note on August 3 1·The entry to reflect the default will include Debit note receivable $21.000 Debit accounts receivable $21,000 Debit notereceivable $20,000 Debit accounts receivable $20,000 C. d.

Explanation / Answer

SOLUTION

27. Original cost of the asset is $262,000.

Let original cost be X

Original cost - Accumulated depreciation = Sales price - Gain on sale

X - $138,000 = $142,000 - $18,000

X - $138,000 = $124,000

X = $124,000 + $138,000

X = $262,000

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