0. On January 1, 2016, Rexford Company purchased a drilling machine for $11,500. The machines has an estimated useful life of 4 years and a salvage value of $200. Given this information, if Rexford uses double-declining-balance method of depreciation, and sells the machine on December 31, 2017, for $3,000 cash.

Then how much will be gain or loss on disposal of this asset?

1. $ 2,750 loss

2. $ 1,800 loss

3. $1,562 gain

4. $ 125 gain

12. Which of the following regarding the lower of cost or market rule for inventory are true?

1. The lower of cost or market rule is an example of the historical cost principle.

2. When the market value (net realizable value) of inventory drops below the cost shown in the financial records, net income is not affected.

3. When the market value (net realizable value) of inventory drops below the cost shown in the financial records, total assets (total net book value) are reduced.

a. (1)

b. (2)

c. (3)

d. (1) and (3)

e. All of the three

13. Raven Company had the following account balances;

Sales revenue : $1,000

Sales returns and Allowances: $2,400

Sales Discounts: $2,400

Bad Debts: $400

Given these balances, what is the amount of net sales to be reported on the comprehensive income statement?

1. $100,000

2. $98,000

3. $95,600

4. $95,200.

14. Dongguk Industry, adopting Perpetual Inventory recording system, recorded two inventory layers by the end of June 30:

- 100 units unit cost $20 (purchased on June 25) .

- 80 units unit cost $22

Dongguk Industry physically counted to identify 175 units and Net Realiable Value is valued at $19 per unit. If the company uses FIFO cost flow assumption, what are the inventory shrinkage loss and inventory valuation loss?

1. Inventory shrinkage loss: $100, Inventory valuation loss: $335

2. Inventory shrinkage loss: $95, Inventory valuation loss: $340

3. Inventory shrinkage loss: $105, Inventory valuation loss: $330

4. Inventory shrinkage loss: $110, Inventory valuation loss: $325