FINANCIAL ACCOUNTING QUIZ 6 1. The Land account would include

| March 31, 2017

Question
FINANCIAL ACCOUNTING QUIZ 6

1. The Land account would include all of the following costs except:

a. costs to grade the land for building. c. the cost of a title search to verify clear title before purchase.

b. the cost of building a parking lot. d. the cost of tearing down an old building to prepare the land for use.

2. Compton Contractors acquired a used storage building that was in poor physical condition due to inadequate maintenance and vandalism. Before placing the building in use,Compton spent several thousand dollars replacing broken windows, painting the building, and installing new support beams. These fix-up expenditures should be recorded by debiting which of the following accounts?

a. Repair Expense c. Building

b. Accumulated Depreciation, Building d. Land Improvements

Information for questions 3-6: On January1, 2016, Hanson’s Deli purchases for $30,000 a delivery truck that will be driven an estimated 100,000 miles. The truck has an estimated useful life of ten years and an estimated salvage value of $6,000. Hanson’s fiscal year is the calendar year. Calculate the amounts requested below.

3. The total accumulated depreciation after the truck has been used for 4 years, under the straight-line method.

a. $4,800 c. $6,800

b. $12,800 d. $9,600

4. Depreciation Expense for 2016, under the production method. Assume 20,000 miles were driven in 2016.

a. $1,200 c. $4,800

b. $6,400 d. $1,600

5. Depreciation Expense for 2018, under the double-declining balance method.

a. $4,096 c. $3,840

b. $4,500 d. $3,072

6. Assume the truck was purchased on 7/1/16. The depreciation expense for 2017, under double-declining balance method would be:

a. $4,320 c. $5,500

b. $5,400 d. $4,240

7. The recording of an ordinary repair will increase the carrying value of the asset repaired.

a. True b. False

8. The cost of an extraordinary repair on equipment will typically be charged (debited) to:

a. the ‘Depreciation Expense’ account

b. the ‘Repair Expense’ account

c. the ‘Accumulated Depreciation, Equipment’ account

9. Assume that a machine with a cost of $5,000 has accumulated depreciation of $1,500. It was sold for $3,800. Which of the following would be part of the journal entry to record this sale?

a. debit Accumulated Depreciation for $1,500

b. credit the Machine account for $3,500

c. credit Loss on Disposal for $300

d. debit Gain on Disposal for $300

10. Assume an older truck with a cost of $24,000 has accumulated depreciation of $14,000. The older truck and $18,000 cash are traded for new equipment valued at $30,000. Which of the following would be part of the journal entry to record this exchange?

a. debit Loss on Disposal for $2,000

b. debit Equipment for $30,000

c. credit Accumulated Depreciation for $14,000

d. debit Cash for $18,000

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