Question

19)

A company purchased a delivery van for $23,000 with a salvage value of $3,000. It has an estimated life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize each year?  

		$5,000
		$1,000
		$4,000
		$1,533

20)

A company sold $20,000 of equipment, accepting a 30-day note bearing interest at 12% per year (assume a 360 day year) for the $20,000. The entry to record the receipt of the amount collected at maturity will include which of the following, assuming no interest had been accrued.?

		Credit interest revenue $200
		Credit interest revenue $2,400
		Credit Notes Receivable $20,200
		Debit Cash for $20,000

Answer 1

19)	Straight Line Depreciation = Purchase Price of Asset - Approximate salvage value/Estimated Useful Life of Asset
		Purchase Price of Asset	23000
		Approximate salvage value	3000
		Estimated Useful life of asset	5 years
		Straight Line Depreciation =	23000-3000/5 years
		=	23000-3000
		=	20000
		=	20000/5
		Depreciation Expenses =	4000
	Correct answer : Option C = 4000
			Debit	Credit
20)	Account Receivable	20200
	Notes Receivable		20000
	Interest Revenue		200
	(20000*12%*30/360 = 200)
	Debit to Accounts receivable for 20200
	Credit to notes Receivable for 20200
	Debit to cash for 20200
	Correct answer : option C =credit notes receivable 20200