Question

1)The following transactions of M&B Merchandise Company are given:

                                                                                                                      

January 2, 2019	Purchased merchandise for TL 23.000 under the condition 10/6; n/30.
January 4, 2019	Returned merchandise worth TL 6.000.
January 6, 2019	Sold merchandise for TL 8.000 under the condition 4/7; n/30. The cost of merchandise sold was TL 5.000.

What is the value of merchandise after these transactions?

		17.000 TL
		15.000 TL
		11.000 TL
		12.000 TL

2)Company Z discovered that some merchandise purchased on account was defective and returned the goods to the supplier. The entry to record this return will reduce Company Z’s:

		Sales return and the cost of goods sold
		Inventory and cost of goods sold
		Inventory and liabilities
		Sales revenue and liabilities

3)On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400. In its financial statements, Shoreham uses straight-line depreciation. The ending balance of accumulated depreciation at December 31, 2017, will be:

		$7,200
		$15,200
		$14,400
		$7,600

4)Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. The depreciation expense for the seventh year of use would be in value of:

		$42,000
		$6,000
		$8,000
		$2,000

Answer 1

Solution to Q1

Value of Merchendise after those transcations

= [( purchase - Purchase Return - Sales(cost value)]

= (23.000 - 6.000 - 5.000) = 12.000 TL(Ans)

Solution to Q2

Explanation- Through a exampel

suppose you are a trader , you prchase good from the supplier and sell to the customer. At the end of the month some your customer returned some defectiv goods to you and then you will also retruned the those goods to the supplier . As a result your inventory will increse when you getting the goods from the customer but after when you returned the goods to your supplier it will reduce your inventory and alos reduce your accounts payable( liabilities).

Ans -  The entry to record this return will reduce Company Z’s:- Inventory & liabilities

Solution to Q3

The ending balance of accumulated depreciation at December 31, 2017, will be:

Formula for computing Depriciation per year uder Straight Line Methode

=( purchase price - Residual Value) / No of estimated Life of the machine

= ($45,600 - $2,400) / 6 years

= $ 7200 per year

At the end of the year 2016 entry was made

depriciation expense ... debit.. 7200

accumulated depriciation ... credit..7200

at the year end 31.12.2017 entry will be

depriciation expense ... debit.. 7200

accumulated depriciation ... credit..7200

Ans:- so accumulated depriciation at 31.12.2017= ( 7200 +7200) =$ 14400

Solution to Q4

Formula for computing Depriciation expense per year uder Straight Line Methode

=( purchase price - Residual Value) / No of estimated Life of the machine

= ($80,000 - $20,000) / 10 years

= $ 6000

Ans-The depreciation expense for the seventh year of use would be in value of: $ 6000

Note- The depriciation expenses are constant ( equal) for each year under straight line methode

journal entry for recording depriciation at the end of 7th year

Depriciation expense.....debit 6000

Accumulated Depriciation ..... credit... 6000