ATTACHMENT PREVIEW

1.
A company purchased a cash register on January 1 for \$7,000. This register has a useful life of 5
years and a salvage value of \$1,200. What would be the depreciation expense for
the
second
year of its useful life using the double-declining-balance method?
\$2,320.
\$1,616.
\$2,800.
\$1,160.
\$1,680
2.
A company used straight-line depreciation for an item of equipment that cost \$18,750, had a
salvage value of \$5,000, and had a five-year useful life. After depreciating the asset for three
complete years, the salvage value was reduced to \$2,100 and its total useful life was increased
from 5 years to 6 years. Determine the amount of depreciation to be charged against the
machine during each of the remaining years of its useful life:
\$2,800.
\$2,667.
\$3,330.
\$2,775.
\$1,750.
3.
Marble Company purchased a machine costing \$127,000, terms 2/10, n/30. The machine was
shipped FOB shipping point and freight charges were \$2,700. The machine requires special
mounting and wiring connections costing \$10,700. When installing the machine, \$2,000 in
damages occurred. Materials costing \$2,200 are used in testing and adjusting the machine to
produce a satisfactory product. Compute the cost recorded for this machine assuming Marble
paid within the discount period.
\$144,600.
\$138,060.
\$142,060.
\$137,360.
\$140,060.
4.
Thomas Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of \$168,000.
The asset is expected to have a salvage value of \$16,700 at the end of its five-year useful life. If
the asset is depreciated on the double-declining-balance method, the asset’s book value on
December 31, Year 3 will be
(Do not round intermediate calculations)
:
\$49,572
\$54,432
\$36,288

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\$33,048
\$151,200
5.
Lomax Enterprises purchased a depreciable asset for \$27,500 on March 1, Year 1. The asset
will be depreciated using the straight-line method over its four-year useful life. Assuming the
asset’s salvage value is \$3,100, what will be the amount of accumulated depreciation on this
asset on December 31, Year 4? (Do not round intermediate calculations. Round your final
\$23,383.33
\$6,100.00
\$24,400.00
\$5,083.33
\$20,333.33
6.
During August, Arena Company sells \$352,000 in product that has a one year warranty.
Experience shows that warranty expenses average about 5% of the selling price. The warranty
liability account has a balance of \$11,400 before adjustment. Customers returned product for
warranty repairs during the month that used \$8,000 in parts for repairs. The entry to record the
estimated warranty expense for the month is:
Debit Estimated Warranty Liability \$17,600; credit Warranty Expense \$17,600.
Debit Estimated Warranty Liability \$8,000; credit Warranty Expense \$8,000.
Debit Warranty Expense \$17,600; credit Estimated Warranty Liability \$17,600.
Debit Warranty Expense \$6,200; credit Estimated Warranty Liability \$6,200.
Debit Warranty Expense \$14,200; credit Estimated Warranty Liability \$14,200.
7.
A company sells computers at a selling price of \$1,750 each. Each computer has a 2 year
warranty that covers replacement of defective parts. It is estimated that 3% of all computers sold
will be returned under the warranty at an average cost of \$149 each. During November, the
company sold 29,000 computers, and 390 computers were serviced under the warranty at a total
cost of \$54,000. The balance in the Estimated Warranty Liability account at November 1 was
\$28,500. What is the company’s warranty expense for the month of November?
\$58,110
\$54,000
\$25,500
\$64,815
\$129,630
8.
A company had fixed interest expense of \$4,500, its income before interest expense and any
income taxes is \$17,000, and its net income is \$7,400. The company’s times interest earned
ratio equals:

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