Question

A piece of equipment was acquired on January 1, 2018, at a cost of $72,000, with an estimated residual value of $3,000 and an estimated useful life of six years. The company uses the double-declining-balance method. What is its book value at December 31, 2019?

Multiple Choice

• $23,000

• $32,000

• $49,000

• $24,000

Pettygrove Company had 1,900,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $9,500,000, and Retained Earnings is $2,850,000. The company issues a 2-for-1 stock split. The market price of the stock is $13. What is the balance in the Common Stock account after this issuance?

Multiple Choice

• $38,000,000

• $28,500,000

• $19,000,000

• $43,700,000

Wool Co. makes a sale and collects a total of $460.10, which includes an 7% sales tax. What is the amount that will be credited to the Sales Revenue account?

Multiple Choice

• $430.00

• $428.00

• $492.31

• $460.10

Answer 1

1
Double-declining Depreciation rate	33.3333%	=1/6*2
Depreciation for 2018	24000	=72000*33.3333%
Depreciation for 2019	16000	=(72000-24000)*33.3333%
Book value at December 31, 2019	32000	=72000-24000-16000
Option B $32,000 is correct
2
Balance in the Common Stock account after stock split will be same as before.
Number of shares after stock split	3800000	=1900000*2
Par value per share after stock split	5	=10/2
Balance in the Common Stock account	19000000	=3800000*5
Option B $19,000,000 is correct
3
Amount credited to the Sales Revenue account	430.00	=460.1/107*100
Option A $430.00 is correct