Question

1)On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400. In its financial statements, Shoreham uses straight-line depreciation. The book value of the equipment at December 31, 2017, will be:

		$42,000
		$26,600
		$36,000
		$31,200

2)Sayville Dairy sold a delivery truck for cash of $8,680. The original cost of the truck was $33,600, and a loss of $5,320 was recognized on the sale. The accumulated depreciation at the date of sale must have been:

		$24,920
		$3,360
		$19,600
		$14,560

3)

On May 5, 2017, Lloyd purchased a machine for $84,000. The estimated life of the machine was 10 years, with an estimated residual value of $10,000. The service life in terms of “output” is estimated at 8,000 hours of operation. Assume Lloyd uses the units-of-output method and that the machine was in operation for 1,000 hours in 2017 and 1,800 hours in 2018. The book value of the machine at December 31, 2018 is:

		$25,900
		$56,700
		$48,100
		$58,100

4)

The following transactions are given for TTB Company.

10 Jun: Purchased merchandise on account from Tiger Company for TL 1.850.

15 Jun: Sold merchandise on account (TL 400) under the condition 5/10,n/30. Its cost was TL 300.

27 Jun: One customer returned the goods (TL 50). Their cost was TL 30.

28 Jun: Sold merchandise on account (TL 600) under the condition 5/10,n/30. Its cost was TL 450.

30 Jun: Collected cash for the sale from 28 Jun.

Gross Profit after these transactions is:

		620 TL
		720 TL
		300 TL
		200 TL

Answer 1

1) $31,200

Explanation:

Annual depreciation is (45,600-2,400)/6=$7,200

Accumulated depreciation for 2 years(jan 1, 2016 to Dec 31, 2017)=7200*2=$14,400

Book Value=45600-14400=$31,200

2)$19,600

Explanation:

We know that;

Loss/Profit on sales=Sales price-(Original Cost-Accumulated Depreciation)

thus;

-5320=8680-(33600-Accumulated Depreciation)

Accumulated Depreciaiton=-5320-8680+33600=$19,600

3)$58,100

Explanation:

Depreciation = (Original Cost-Salvage)*used hours /Total hours

Depreciation for 2017=(84000-10000)*1000/8000=$9,250

Depreciation for 2018=(84000-10000)*1800/8000=$16,650

Total Accumulated depreciation=$25,900

Book Value=84,000-25,900=$58,100

4)200 TL

Explanation:

Gross profit=Net sales-COGS

Net Sales=Sales-sales return-discounts=(400-50)+(600-30)=920   

COGS=(300-30)+450=720

Gross profit=920-720=200

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