Question

1) A company incurred the following costs: Purchase price of land Survey fees Payment for demolition of old building on land Back property taxes on land Paving costs for parking lot Fence around perimeter of land Lights in parking lot Signs for new business $270,000 4,000 20,000 2,000 60,000 15,000 90,000 5,000 What is the cost of the land? A) $270,000. B) $296,000. C) $356,000. D) $294,000. E) None of the above. 2) Equipment costing $40,000with a book value of $16,000 is sold for $23,000. Which journal entry is used to record the sale? A) debit Cash for $23,000 and credit Equipment for $23,000. B) debit Cash for $16,000, debit Accumulated Depreciation - Equipment for $24,000 and credit Equipment for $40,000. C) debit Cash for $23,000, debit Accumulated Depreciation - Equipment for $24,000, credit Equipment for $40,000 and credit Gain on Sale of Equipment for $7,000. D) debit Cash for $16,000, debit Loss on Sale of Equipment for $7,000 and credit Equipment for $23,000 3) Lorenzo Corporation purchased equipment on January 1, 2019 for $600,000. The equipment had an estimated useful life of 5 years and an estimated salvage value of $60,000. After using the equipment for 2 years, the company determined that the equipment could be used for an additional 6 years and have a salvage value of $8,000. Assuming Lorenzo Corporation uses straight-line depreciation, compute depreciation expense for the year ending December 31, 2021. (Round your final answer to the nearest dollar.)

Answer 1

1 Cost of Land 270000+4000+20000+2000 $296,000 Answer : B 9 2 0 Answer C Debit Cashfor $23,000, Debit Accumalated Depreceiation Equipment for $24,000 credit equipment for $40,000 and creditgain on sale of equipment for $7,000 1 2 3 4 5 3 Depreciation Expense for Year end December 31,2021 $41,778 6 7 Calculations Salvage value Depreciation for 2 years 60,000 $216,000 $ Purchase life $600,000 5 $ Jan 1 2019 $384,000 9(5+6-2) 0 Book Value as onJan 2021 8,000 41,778 1 2