r. Tyler Company purchased machinery on Jaary 1 at a cost of $200,000. Tyler paid $10,000 sales tax on the machinery, and paid installation charges of $3,520. Prior to installation, Tyler paid $8,000 to pour a concrcte What is the total oost of the new machinery slab on which to place the machinery. a. $209,520 b. $217,520 e. $221,520 d. $202,000 . Failure to record depreciation expense causes which of the following to occur: a. Current assets are not affected and liabilities are understated. b. Current e. Current d. Current assets are overstated and retained assets are overstated and retained earnings is overstated assets are not affected and retained earnings is overstated. earnings is understated 9. A company sells a plant asset that originally cost $1 50,000 for $50,000 cash on Decomber 31, 2009. he accurma lated depreciation account had a balance of $60,000 on December 31, 2009. The company should recognize a a. $100,000 loss on disposal b. $40,000 gain on disposal. e. $40,000 loss on disposal. d. $25,000 loss on disposal 10. On April 1, 2010, Wagner Company purchased a truck for $75,000. It is estimated that the truck will have a usefal life of 7 years, and a $5,000 salvage value. The amount of straight line Depreciation Expense recognized for the year 2010 would be a. $15,000. b. $10,000. c. $7,500. d. $6,667. 11. The following totals for the month of April were taken from the payroll register of Main Company: Salaries FICA taxes withheld Income taxes withheld Medical insurance deductions Federal Unemployment Taxes $24,000 1,100 5,000 900 64 432 State Unemployment Taxes celli The entry to record accrual of employer\'s payroll taxes would include a a. debit to Payroll Tax Expense for $496. b. debit to Payroll Tax Expense for $1,596. c. credit to FICA Taxes Payable for $2,200. d. credit to Payroll Tax Expense for $496. 12. Which of the following accounts is not usually a current liability a. bonds payable b. unearned revenue. c interest payable. d. FICA taxes payable. Which of the following show the proper effect of a stock split and a stock dividend? 2 of 8
Answer to Question No. 7
Option C is Correct.
Cost of Asset includes all the cost incurred to put the asset into use. Therefore,
Cost of New Machinery = Cost of Machinery + Sales Taxes + Installation Charges + Other Expense
Cost of New Machinery = $200,000 + $10,000 + $3,520 + $8,000
Cost of New Machinery = $221,520
Answer to Question No. 8
Option C is Correct.
Failure to record Depreciation expense will reduce Expenses and Accumulated Depreciation. The reduction in expense would increase Net Income, which will in turn overstate Retained Earnings. And, reduce Accumulated Depreciation would reduce Net Fixed Assets. But failure to record Depreciation Expense would not effect Current Assets.
Answer to Question No. 9
Option C is Correct.
Cost of Plant Asset = $150,000
Accumulated Depreciation on Plant Asset = $60,000
Book Value of Plant Asset on date of Sale = $150,000 - $60,000 = $90,000
Sale Value of Plant Asset = $50,000
Since, Sale value of Plant Asset i.e. $50,000 is less than the Book Value of Plant Asset on the date of Sale i.e. $90,000, there is a loss of $40,000 ($50,000 - $90,000) on disposal of Plant Asset.
Answer to Question No. 10
Option C is Correct.
Straight Line depreciation per year = (Cost – Salvage Value) / Useful Life
Straight Line depreciation per year = (75,000 – 5,000) / 7
Straight Line depreciation per year = $10,000
Depreciation Expense for the year 2010 = $10,000 * 9/12
Depreciation Expense for the year 2010 = $7,500
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