- Diamonds & Pearls Mining Company buys new drilling equipment for $800,000. This equipment is estimated to have a useful life of 15 years and a salvage value of $50,000. Diamonds & Pearls expect this equipment to be able to drill through 600,000 feet of rock. The equipment was purchased on January 1, 2018, and the companys fiscal year-end is December 31st.

Assume the equipment was used to drill through 60,000 feet of rock during 2018. Using the activity-based method, what is the depreciation expense for 2018?

1. $53,333

2. $75,000

3. $113,333

4. $106,667

- Diamonds & Pearls Mining Company buys new drilling equipment for $800,000. This equipment is estimated to have a useful life of 15 years and a salvage value of $50,000. Diamonds & Pearls expect this equipment to be able to drill through 600,000 feet of rock. The equipment was purchased on January 1, 2018, and the companys fiscal year-end is December 31st.

Using the straight-line method of depreciation, what is the depreciation expense for 2018?

1. $56,667

2. $50,000

3. $53,333

4. $106,667

- Diamonds & Pearls Mining Company buys new drilling equipment for $800,000. This equipment is estimated to have a useful life of 15 years and a salvage value of $50,000. Diamonds & Pearls expects this equipment to be able to drill through 600,000 feet of rock. The equipment was purchased on January 1, 2018, and the companys fiscal year end is December 31st.

Using the double-declining balance method, what is the depreciation expense for 2018? (Round your answer to the nearest dollar).

1. $53,333

2. $106,667

3. $50,000

4. $100,000

- Terrific Tubers Potato Farm needs cash until it sells and delivers its potato crop. Spud National Bank extends a $300,000, 6% loan to Terrific Tubers on December 1, 2018, for which Terrific Tubers signs a note payable. The loan agreement states that all principal and interest will be repaid on March 31, 2019. Terrific Tubers fiscal year ends on December 31.

Select the journal entry to record the note payable on December 1, 2018 for Terrific Tuber.

1. Debit Cash $318,000

Credit Notes Payable $318,000

2. Debit Notes Payable $300,000

Credit Cash $300,000

3. Debit Cash $300,000

Credit Notes Receivable $300,000

4. Debit Cash $300,000

Credit Notes Payable $300,000

- Terrific Tubers Potato Farm needs cash until it sells and delivers its potato crop. Spud National Bank extends a $300,000, 6% loan to Terrific Tubers on December 1, 2018, for which Terrific Tubers signs a note payable. The loan agreement states that all principal and interest will be repaid on March 31, 2019. Terrific Tubers fiscal year ends on December 31.

Select the correct journal entry to record the payment of the note payable on March 31, 2019.

1. Debit Notes Payable $300,000

Debit Interest Payable $1,500

Debit Interest Expense $4,500

Credit Cash $306,000

2. Debit Notes Payable $300,000

Credit Cash $300,000

3. Debit Cash $306,000

Debit Interest Expense $4,500

Credit Interest Payable $10,500

Credit Notes Payable $300,000

4. Debit Notes Payable $300,000

Debit Interest Payable $1,500

Credit Interest Expense $4,500

Credit Cash $297,000

- Terrific Tubers Potato Farm needs cash until it sells and delivers its potato crop. Spud National Bank extends a $300,000, 6% loan to Terrific Tubers on December 1, 2018, for which Terrific Tubers signs a note payable. The loan agreement states that all principal and interest will be repaid on March 31, 2019. Terrific Tubers fiscal year ends on December 31.

Select the correct adjusting journal entry required on December 31, 2018, when financial statements are prepared.

1. Debit Interest Payable $1,500

Credit Interest Expense $1,500

2. Debit Interest Expense $1,500

Credit Interest Payable $1,500

3. Debit Interest Expense $18,000

Credit Interest Payable $18,000

4. Debit Interest Expense $1,500

Credit Cash $1,500