1.Equipment was purchased for $17,000. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be 1. $3,940 2. $3,340 3. $2,800 4. $2,860 2. A company sells a plant asset that originally cost $150,000 for $70,000 on December 31, 2005. The accumulated depreciation account had a balance of $60,000 after the current year's depreciation of $15,000 had been recorded. The company should recognize a 1. $20,000 loss on disposal 2. $20,000 gain on disposal 3. $80,000 loss on disposal 4. $5,000 loss on disposal 3. If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting 1. a revenue expenditure account 2. the Patent account 3. the Intangible Loss account 4. Legal Expense 4. A company has the following assets: Buildings and Equipment, less accumulated depreciation of $2,500,000........................$12,000,000 Copyrights.................................................1,200,000 Patents.....................................................5,000,000 Land.........................................................6,000,000 The total amount reported under Property, Plant, and Equipment would be 1. $18,000,000 2. $24,200,000 3. $19,200,000 4. $23,000,000 5. On January 1, a machine with a useful life of five years and a residual value of $3,000 was purchased for $15,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation. 1. $2,880 2. $6,000 3. $3,600 4. $4,800 6. A factory machine was purchased for $25,000 on January 1, 2005. It was estimated that it would have a $5,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours ran in 2005 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2005 would be 1. $2,000 2. $4,000 3. $2,500 4. $5,000 7. Under the allowance method, writing off an uncollectible account 1. affects both balance sheet and income statement accounts 2. is not acceptable practice 3. affects only income statement accounts 4. affects only balance sheet accounts 8. An aging of a company's accounts receivable indicates that $3,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a 1. debit to Bad Debts Expense for $1,800 2. credit to Allowance for Doubtful Accounts for $3,000 3. debit to Allowance for Doubtful Accounts for $1,800 4. debit to Bad Debts Expense for $3,000 9. July 1.......Beginning inventory.......10 units at $120 each July 5.......Purchases...................60 units at $112 each July 14......Sale...........................40 units July 21......Purchases..................30 units at $116 each July 30......Sale...........................28 units Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis? 1. $7,728 2. $7,696 3. $7,736 4. $3,672 10. A company just starting business made the following four inventory purchases in June: June 1...........150 units......................$825 June 10.........200 units.....................1,120 June 15.........200 units.....................1,140 June 28.........150 units........................885 Total Purchases..............................$3,970 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the periodic LIFO inventory method, the value of the ending inventory on June 30 is 1. $1,425 2. $1,385 3. $1,475 4. $1,455