1. Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the 2nd year's depreciation using straight-line depreciation.
a. $26,000
b. $24,800
c. $12,400
d. $13,000
2. Which of the following is true?
a. If using the double-declining-balance the total amount of depreciation expense during the life of the asset will be the highest.
b. If using the units-of-production method, it is possible to depreciate more than the depreciable cost.
c. If using the straight line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance.
d. Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.
3. You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or decrease your company's bank account balance. Complete the following table to help your new staff understand.
ITEM Debit or Credit Memo Increases or Decreases the Company's Bank Account Balance
Item Dr or Cr Increases or Decreases
EFT payment
Bank correction of an error due to posting another customer's check to your account:
Service Charge
Note collected for our company....
NSF check
Bank correction of an error recording a $520 deposit as $250:
EFT deposit
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4. Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500.
a) What was the depreciation expense for the first year?
b) Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment.
c) Journalize the entry to record the sale.