1. Assume that Magna Corp. has gross revenues of $15 million in the current year. Identify two important factors that investors should consider in evaluating the reasonableness of this dollar amount. Explain what investors may learn from each of these considerations.

2. Wolford Inc. purchased new equipment on January 1, 2019, at a cost of $17,000 and paid $3,000 in installation charges. The company estimated that the equipment would have a useful life of 6 years and a residual value of $2,000.

Requirements: Calculate the cost of the equipment that would be capitalized and the annual depreciation expense using the straight-line method.

3.On July 1, 2019, Foley Company signed a $200,000, two-year, 6 percent note payable. The principal and interest will be paid on June 30, 2020. How much interest expense should be reported on the income statement for the month ended July 31, 2019?

		$0
		$1,000
		$12,000
		$6,000