accounting test #3 chapter 8

debit cash and accumulated depreciation, credit the limo and gain on sale of limo

AOn January 1, Year 5, Raven Limo Service, Inc. sold a used limo that had cost $64,000 and had accumulated depreciation of $36,000. The limo was sold for $30,000 cash. Which of the following shows the adjusting entry necessary to recognize the sale of the asset?

as nonoperating items on the income statement

Gains and losses are reported

38,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, the amount of accumulated depreciation shown on the Year 3 balance sheet is

24,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, the amount of book value shown on the Year 2 balance sheet is

increase in accumulated depreciation and expenses. decrease in retained earnings and net income. cash flows not affected

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements?

debit depreciation expense (8000), credit accumulated depreciation (8000)

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1, 20,000 miles during Year 2, 35,000 miles during Year 3 and 10,000 miles during Year 4. If Marino uses the units-of-production method, which of the following shows the adjusting entry necessary to recognize depreciation expense at the end of Year 2?

2000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. Marino planned to drive the truck for 100,000 miles and then to sell it. The truck was expected to have an $8,000 salvage value. The truck was actually driven 40,000 miles during Year 1; 20,000 miles during Year 2; 35,000 miles during Year 3; and 10,000 miles during Year 4. If Marino uses the units-of-production method, the amount of depreciation expense recognized on the Year 4 income statement is

2,000 loss

On January 1, Year 1, Raven Limo Service, Inc. paid $64,000 cash to purchase a limousine. The limo was expected to have a six year useful life and a $10,000 salvage value. On January 1, Year 5 the limo was sold for $26,000 cash. Assuming Raven uses straight-line depreciation, the Company would recognize a

2000

On January 1, Year 1, Raven Limo Service, Inc. paid $64,000 cash to purchase a limousine. The limo was expected to have a six year useful life and a $10,000 salvage value. On January 1, Year 5 the limo was sold for $30,000 cash. Assuming Raven uses straight-line depreciation, the Company would recognize a

*

On January 1, Year 5, Raven Limo Service, Inc. Raven sold a used limo that had cost $64,000 and had accumulated depreciation of $36,000. The limo was sold for $26,000 cash. Which of the following shows how the sale of the limo would affect Raven's financial statements?

*

On January 1, Year 5, Raven Limo Service, Inc. sold a used limo that had cost $64,000 and had accumulated depreciation of $36,000. The limo was sold for $30,000 cash. Which of the following shows how the sale of the limo would affect Raven's financial statements?

units-of-production method to compute depreciation expense

The revenue stream for Marino Moving Company fluctuates from year to year. Based on this information alone, Marino should use the