1. Lexis Company purchased equipment on January 1, 2010 for $35,500. The estimated useful life of the equipment was 7 years and the estimated residual value was $4,000. After using the straight-line method of depreciation for 3 years, the estimated useful life was revised to 9 years on January 1, 2013. How much is depreciation expense for 2013.
2. Navajo Mining Company purchased a mine in 2011 for $3,400,000. It was estimated that the mine contained 200,000 tons of ore and that the mine would be worthless after all of the ore was extracted. The company extracted 25,000 tons of are in 2011 and 30,000 tons of ore in 2012.
What is the depletion expense for 2011?
3. A mine is purchased for $4,000,000. There will be salvage value of $300,000 when the land is restored after mining is completed. The mine has an estimated 250,000 tons of coal. What is the depletable cost per ton of coal?
4. A company has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit. The company's lawyers believe it is more than remote but less than probable that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management?
5. Ace Appliances sells dishwashers with a 3-year warranty. They expect 3% of the dishwashers to need repairs in year 1, 7% in year 2 and 15% in year 3. They sell 500 dishwashers in 2009 with the warranty in effect from 2009 to 2011. Each repair is estimated at $40. If 4% of the dishwashers need repairs in 2009, what is the 2009 warranty expense?
6. An employee's hourly rate is $25, with time-and-a-half for hours over 40 hours. FICA is withheld at the rate of 8%, federal income tax withholding is 15% and state income tax withholding is 3%. What is the employee's net pay if the employee worked 45 hours this week? Round to the nearest dollar.
