Question

1.

The Charleston Company purchases a machine on 1/1/18:



The book value at 12/31/20 will be:

Cost Salvage Value Estimated Life Depreciation $28,000 $6,000 8 years Straight-Line

Select one:

a. $16,250

b. $19,750

c. $17,000

d. $13,750

e. $22,500

2.

Given the following data:



Net Income is:

Select one:

a. Overstated $24

b. Understated $6

c. Overstated $16

d. Understated $15

e. Understated $14

3.

The Bozeman Company had current assets of $500 and current liabilities of $400 prior to the following transactions:

1. Collection of an account receivable, $100
2. Payment of an account payable, $80

The combined effect of these two transactions will cause what effect on Working Capital and the Working Capital Ratio, respectively?

Select one:

a. No Effect, Decrease

b. No Effect, Increase

c. No Effect, No Effect

d. Decrease, Decrease

e. Decrease, Increase

4.

If a retail store has a current ratio of 2.2 to 1 and current assets of $330,000, the amount of working capital is:

Select one:

a. $110,000

b. $180,000

c. $220,000

d. $108,000

e. $150,000

Answer 1

Cost	$   28,000
Less: Salvage value	$   (6,000)
Depreciable value	$   22,000
Depreciation per year ($22,000/8)	$     2,750
Book value at 12/31/20 ($28,000-($2,750*3)	$   19,750

Answer is B. $19,750