Online Quiz 14 Flashcards
Hane Company purchased a machine for $30,000. Hane paid $18,000 cash and signed a note payable agreeing to pay the remaining $12,000 in the future.
Which ONE of the following is included in the journal entry necessary to record this purchase of a machine?
CREDIT to Machine for $30,000
CREDIT to Notes Payable for $30,000
CREDIT to Cash for $30,000
DEBIT to Machine for $18,000
DEBIT to Machine for $30,000
Answer: DEBIT to Machine for $30,000
Pecos Yo Company purchased a machine for $100,000 in cash on January 1 of Year 1. The machine has an estimated useful life of 8 years and an estimated salvage value of $10,000. Pecos Yo Company uses the straight-line method for computing depreciation expense.
What is DEPRECIATION EXPENSE for Year 1?
$12,500
$13,750
$11,250
$8,000
Answer: $11,250
YSP Company owns a building. YSP computed depreciation expense for the year on its building to be $20,000. Which ONE of the following is included in the journal entry necessary to record depreciation expense on the building?
CREDIT to Accumulated Depreciation for $20,000
CREDIT to Depreciation Expense for $20,000
DEBIT to Accumulated Depreciation for $20,000
DEBIT to Building for $20,000
CREDIT to Cash for $20,000
Answer: CREDIT to Accumulated Depreciation for $20,000
Quacksef Company purchased a machine on January 1 of Year 1 for $30,000. Depreciation expense on the machine was $4,000 in Year 1, $4,000 in Year 2, and $4,000 in Year 3.
What is the BOOK VALUE of the machine as of the END of Year 3?
$30,000
$18,000
$12,000
$42,000
$26,000
Answer: $18,000
Bodie Company purchased a machine for $50,000 in cash on June 1 of Year 1. The machine has an estimated useful life of 5 years and an estimated salvage value of $5,000. Bodie Company uses the straight-line method for computing depreciation expense.
Which ONE of the following is included in the journal entry necessary to record depreciation expense on the machine for Year 1?
CREDIT to Accumulated Depreciation for $9,000
CREDIT to Depreciation Expense for $9,000
DEBIT to Depreciation Expense for $5,250
DEBIT to Depreciation Expense for $3,750
CREDIT to Cash for $9,000
Answer: DEBIT to Depreciation Expense for $5,250
Hahnny Company purchased a machine for $100,000 in cash on January 1 of Year 1. The machine has an estimated salvage value of $10,000. It is expected that the machine will be used for 15,000 hours during its useful life. During Year 1, the machine was used for 3,000 hours. Hahnny Company uses the units-of-production method for computing depreciation expense. What is DEPRECIATION EXPENSE for Year 1? $20,000 $16,000 $14,000 $12,000 $18,000
Answer: $18,000
Kylie Company has a machine that originally cost $20,000. Since the time of the machine’s purchase, accumulated depreciation of $13,000 has been recorded with respect to the machine. The machine was sold for $5,000 cash.
Which ONE of the following is included in the journal entry necessary to record the sale of the machine for $5,000 cash?
DEBIT to Accumulated Depreciation for $13,000
DEBIT to Machine for $20,000
CREDIT to Loss on Sale of Machine for $2,000
CREDIT to Accumulated Depreciation for $13,000
CREDIT to Cash for $5,000
Answer: DEBIT to Accumulated Depreciation for $13,000
Large Company purchased Small Company for $50,000 cash. At the time of the purchase, Small Company had assets with a fair value of $90,000. Small Company also had liabilities with a fair value of $70,000; Large Company assumed responsibility for the liabilities of Small Company on the date of the purchase.
How much GOODWILL should be recorded by Large Company in connection with this acquisition of Small Company for $50,000 cash?
$20,000
$40,000
$30,000
$90,000
$120,000
Answer: $30,000
Smart Company purchased a patent for $100,000 in cash on January 1 of Year 1. The patent has an estimated remaining economic and legal life of 10 years. As is typical with intangible assets, the patent is assumed to have no estimated salvage value. Smart Company uses the straight-line method for computing amortization expense for its intangible assets.
Which ONE of the following is included in the journal entry necessary to record amortization expense on the patent for Year 1?
CREDIT to Cash for $10,000
CREDIT to Amortization Expense for $10,000
DEBIT to Amortization Expense for $10,000
DEBIT to Patent for $10,000
Answer: DEBIT to Amortization Expense for $10,000
On January 1 of Year 1, Amber Company purchased a silver mine for $100,000. The mine will have no salvage value when all of the silver is removed. As of January 1 of Year 1, it was expected that the mine contained 20,000 ounces of silver. During Year 1, Amber Company removed 1,000 ounces of silver from the mine.
What is the amount of DEPLETION EXPENSE for Year 1?
$10,000
$5,000
$15,000
$20,000
$25,000
Answer: $5,000
