1. Kingston Company purchased a machine on January 1, 2015 for $24,000. There is no salvage value and the machine is expected to last ten years. Management typically records depreciation at year end (December 31). On March 1, 2016 Kingston Company sells the machine for $5,000.

What is the appropriate journal entry to record the sale of the machine?

Dr. Accumulated depreciation $2,800. Dr. Cash $5,000. Dr. Loss on Disposal $16,200. Cr. Machine $24,000

None of the other alternatives are correct

Dr. Accumulated depreciation $2,800. Dr. Machine $24,000. Cr. Loss on disposal $26,800

Dr. Accumulated depreciation 2,400. Dr. Cash $5,000. Dr. Loss on Disposal $16,600. Cr. Machine $24,000

Dr. Accumulated depreciation $4,800. Dr. Cash $5,000. Dr. Loss on Disposal $14,200 Cr. Machine $24,000

2. Which of the following statements is true:

- Straight line interest method on bonds gives a higher interest in the first year than effective interest if bonds are issued at a discount;

- When bonds are issued for more than par, straight line interest method gives higher interest expense in the last year than using effective interest rate;

- Straight line interest yields a constant interest expense but a changing interest rate.

All of the above are false

All of the above are true

I) and II) are true but III) is false

I) and III) are true but II) is false

I) is true but II) and III) are false