1.
Net income = Service revenue - Operating expenses
= 5,700 - 2,450
= $3,250
Correct option is (C)
2.
Net cash flows from operating activities = Cash collections from accounts receivables - Cash paid for operating expenses
= 3,900 - 3,100
= $800
Correct option is (D)
3.
Cost price of truck = $30,000
Useful life = 8 years
Depreciation rate = 2 x 1/Useful life
= 2 x 1/8
= 25%
Depreciation expense for year 1 = Cost price of truck x Depreciation rate
= 30,000 x 25%
= $7,500
Book value of equipment after year 1 = Cost price of truck - Depreciation expense for year 1
= 30,000 - 7,500
= $22,500
Correct option is (A)
4.
List price of equipment = $28,000
Installation cost = $2,200
Cost of equipment = List price of equipment + Installation cost
= 28,000 + 2,200
= $30,200
Salvage value = $4,400
Estimated output = 100,000 units
Depreciation per unit = (Cost of equipment - Salvage value)/Estimated output
= (30,200 - 4,400)/100,000
= 25,800/100,000
= $0.258
Production for year 1 = 12,000 units
Depreciation expense for year 1 = Production for year 1 x Depreciation per unit
= 12,000 x 0.258
= $3,096
Correct option is (C)
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QUESTION 1 Nelson Company experienced the following transactions during Year 1, its first year in operation....
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