Farmer Company sold a piece of equipment for $6,000. Theequipment had an original cost of $34,000 and accumulateddepreciation of $31,000 at the time of the sale. Which of thefollowing correctly shows the effect of the sale on the elements ofthe financial statements?
| Assets | = | Liab. | + | Stk
Equity | Rev./Gain | ? | Exp. | = | Net Inc. | Stmt of Cash Flow |
| A. | 3,000 | | NA | | 3,000 | 3,000 | | NA | | 3,000 | 6,000 OA |
| B. | (3,000) | | NA | | (3,000) | NA | | 3,000 | | (3,000) | 6,000 IA |
| C. | 3,000 | | NA | | 3,000 | 3,000 | | NA | | 3,000 | 6,000 IA |
| D. | 6,000 | | NA | | 6,000 | 6,000 | | NA | | 6,000 | 6,000 IA |
Multiple Choice
Option A
Option B
Option C
Option D
On January 1, Year 1, Friedman Company purchased a truck thatcost $49,000. The truck had an expected useful life of 8 years andan $9,000 salvage value. Friedman uses the double-declining-balancemethod. What is the book value of the truck at the end of Year 1?(Do not round intermediate calculations.)
Multiple Choice
$27,750
$36,750
$39,000
$30,000
Chico Company paid $670,000 for a basket purchase that includedoffice furniture, a building and land. An appraiser provided thefollowing estimates of the market values of the assets if they hadbeen purchased separately: Office furniture, $195,000; Building,$570,000, and Land, $165,000. Based on this information, what isthe cost that should be allocated to the office furniture?(Round your intermediate percentages to four decimalplaces: ie .054231 = 5.42%.)
Multiple Choice
$195,000
$140,499
$158,333
$52,500
On September 1, Year 1, West Company borrowed $52,000 fromValley Bank. West agreed to pay interest annually at the rate of 9%per year. The note issued by West carried an 18-month term. WestCompany has a calendar year-end. What is the amount of interestexpense that will be reported on West's income statement for Year1?
Multiple Choice
