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A machine that originally had an estimated useful life of 8 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years
- A machine that originally had an estimated useful life of 8 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
A. 2 years
B. 5 years
C. 7 years
D. 12 years
E. 10 years
- ALI purchased merchandise from SAAD on October 17 of the current year. SAAD accepted ALI’S $10,000, 90-day, 10% note as payment. What entry should SAAD make on January 15 of the next year when the note is paid?
A.
|
Notes Receivable |
10,000 |
|
|
Interest Receivable |
250 |
|
|
Sales |
10,250 |
B.
|
Cash |
10,250 |
|
|
Notes Receivable |
10,250 |
C.
|
Cash |
10,250 |
|
|
Interest Revenue |
208 |
|
|
Interest Receivable |
42 |
|
|
Notes Receivable |
10,000 |
D.
|
Cash |
10,250 |
|
|
Interest Revenue |
42 |
|
|
Interest Receivable |
208 |
- Ahmed company sold a machine that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the machine was $40,000. The company should recognize a:
A. $0 gain or loss
B. $20,000 gain
C. $20,000 loss
D. $40,000 loss
E. $60,000 gain - Total interest to be earned on a $7,500, 9%, 120-day note is:
- $62.5
- $675.00
- $221.92
- $225.00
- When reimbursing the petty cash fund:
A. Cash is debited
B. Petty Cash is credited
C. Petty Cash is debited
D. Appropriate expense accounts are debited
E. No expenses are recorded
Expert Solution
1 Answer: c. 7 years
revised year-depreciated years = remaining years
10 years - 3 years = 7 years.
2. C.
| Cash | $10250 | |
| Interest revenue | $208 | |
| Interest receivable | $42 | |
| Notes receivable | $10000 |
Interest revenue for current year that's Oct17-Dec31 = 75 days, 10000*10%*75/360=$208, for next year it is interest receivable = 10000*10%*15/360=$42.
3. A. $0 gain or loss
gain or loss = (Cost of asset - accumulated depreciation )-sales price
(100000-40000)-60000 = $0.
4. D. $225
$7500*9%*120days/360 = $225 (it is a standard practice to keep days in a year as 360).
5. D. Appropriate expenses accounts are debited
entry is: expenses a/c debit to cash a/c.
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