Question

9. Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $85,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 82,000 units of product. Determine the machines' second year depreciation under the units-of-production method.

Select one:

a. $16,900

b. $15,600

c. $15,990

d. $17,425

e. $20,880

13. Gaston owns equipment that cost $100,000 with accumulated depreciation of $71,000. Gaston sells the equipment for $26,000. Which of the following would not be part of the journal entry to record the disposal of the equipment?

Select one:

a. Debit Accumulated Depreciation $71,000

b. Debit Loss on Disposal of Equipment $3,000

c. Debit Cash $26,000

d. Credit Gain on Disposal of Equipment $3,000

e. Credit Equipment $100,000

Answer 1

· Answer #9
Correct Answer = Option ‘C’ $ 15,990
--Working           

A	Cost	$            85,000.00
B	Residual Value	$              7,000.00
C=A - B	Depreciable base	$            78,000.00
D	Usage	400,000
E = C/D	Depreciation per …..	$                    0.195

Second year depreciation =82000 units x $ 0.195 = $ 15990

· Answer #10
--Correct Answer = Option ‘D’ Credit Gain on Disposal of Equipment $ 3000.

--Working
>Book Value of asset sold = 100000 – 71000 = 29000
>Sold for $ 26000
>Since Sale price is LESS than book value, there is a LOSS of Sale of $ 29000 – 26000 = $ 3000.
>There wont be any GAIN.