1. Exxonmobil paid $1,600,000 for a Petroleum drilling equipment, which it believes will have $200,000 salvage value at the end of its 5-year life. Compute the depreciation schedule for the equipment using the following methods.
a. Straight line
b. MACRS.
Compare the difference of Book Value of the equipment by the end of the first and second years between method a and b.
2. Selected information for 20X1 for the Arlington Company is as follows:
Cost of Good Sale $8,000,000
Average inventory $2,000,000
Total sales $10,000,000
Average accounts receivables $4,000,000
Net income $2,000,000
3. If there are 260 working days per year, what is the account receivable collection period for Arlington?
a. 65 days
b. 91 days
c. 104 days
d. 146 days