Problem 1: Sheridan Company purchases a new delivery truck for $53000. The sales taxes are $4200. The logo of the company is painted on the side of the truck for $1000. The truck's annual license is $180. The truck undergoes safety testing for $300. What does Sheridan record as the cost of the new truck?
a. $57200.
b. $58680.
c. $58500.
d. $56500.
Problem 2: Wildhorse Co. purchased equipment and these costs were incurred.
|
Cash price
|
$65,000
|
|
Sales taxes
|
4300
|
|
Insurance during transit
|
710
|
|
Installation and testing
|
860
|
|
Total costs
|
$70,870
|
Wildhorse will record the acquisition cost of the equipment as
a. $65000.
b. $70870.
c. $70010.
d. $69300.
Problem 3: Cheyenne Corp. bought equipment on January 1, 2017. The equipment cost $380000 and had an expected salvage value of $25000. The life of the equipment was estimated to be 4 years. The depreciation expense using the straight-line method of depreciation is
a. $101250.
b. $76000.
c. $88750.
d. none of these answer choices are correct.
Problem 4: Which depreciation method is most frequently used in businesses today?
a. Units-of-activity.
b. Double-declining-balance.
c. Declining-balance.
d. Straight-line.
Problem 5: Here are selected 2017 transactions of Martinez Corporation.
Jan. 1 - Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $62,800 and had a useful life of 10 years with no salvage value.
June 30 - Sold a computer that was purchased on January 1, 2015. The computer cost $36,400 and had a useful life of 4 years with no salvage value. The computer was sold for $4,300 cash.
Dec. 31 - Sold a delivery truck for $9,250 cash. The truck cost $23,200 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $4,100 salvage value.
Required: Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Martinez Corporation uses straight-line depreciation.
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