18 The journal entry to record a note received from a custom

18. The journal entry to record a note received from a customer to apply on a. debit Accounts Receivable; credit Notes Receivable. b. debit Notes Receivable; credit Accounts Receivable. c. debit Cash; credit Notes Receivable. d. debit Notes Receivable; credit Cash account is: 19. Which of the following is not classified as an intangible asset on the balance sheet? a Goodwill b. Land c Patents d. Copyright Use the following information to answer questions 20, 21, 22& 23. Equipment is purchased on January 1, 2007, for $165,000. The equipment has an estimated life of ten (l0) years or 21,000 operating hours and an estimated residual value of S15,000. 20. The amount of depreciation to be recorded for the year ended December 31, 2007, using the straight-line method of calculating depreciation, is: a. $15,000 b. $16,500 c. $33,000 d. $14,400 21. The amount of depreciation to be recorded for the year ended December 31, 2007, using double-declining balance method, is: a. $15,000 b. $16,500 C. $33,000 d. $30,000 22. The amount of depreciation to be recorded for the year using the units of production method and assuming that 1,500 hours were used is: a. $11,786 b. $12,500 c. $10,714 d. $1,500 23. The amount of depreciation to be recorded for the year ended December 31, 2007, using straight-ine method of calculating depreciation but assume the equipment was purchased on April 1, is: a. $18,750 b. $24,750 c. $22,500 d. $11,250

Solution

Answer 18:

b. debit Notes Receivable; credit Accounts Receivable.

Explanation: When notes receivable is received from customer, notes receivable will be increased so it will be debited. Also it will reduce account receivable, so it will be credited.

Answer 19:

b. Land

Explanation: Land is a tangible asset which can be touched and felt. While goodwill, patents and copyrights are intangible.

Answer 20:

a. $ 15,000

Explanation: Depreciation as per straight line method:

= (Purchase price – Estimated Residual value) / Estimated life

= ($ 165,000 - $ 15,000) / 10

= $ 150,000 / 10

= $ 15,000 (Answer)

Answer 21:

d.$ 30,000

Explanation: Depreciation as per double declining balance method:

Depreciable Base = Purchase Price – Estimated Residual value

                              =$ 165,000 - $ 15,000

                              = $ 150,000

Depreciation Expense = Depreciable Base / Estimated life

                                     = $ 150,000 / 10

                                     = $ 15,000

Straight-line Depreciation Rate = Depreciation Expense / Depreciable Base X100

                                                        = $ 15,000 / $ 150,000 X 100

                                                        = 10%

Double-declining Depreciation Rate = Straight-line Depreciation Rate x 2

                                                            = 10% X 2

                                                            = 20%

Double-declining Depreciation amount

= Depreciable Base X Double-declining Depreciation Rate

= $ 150,000 X 20%

= $ 30,000 (Answer)

Note: As per answering guidelines I am submitting answers for first 4 questions. For rest of the answers, post questions separtately.

Good Luck.