Question

The cost of the equipment in the prior question was most likely:

  a. $200,000.

                            b. $300,000.

                           c. $400,000.

                            d. Some undeterminable amount.

A truck was purchased at a cost of $23,000. The estimated useful life and salvage value was 8 years and $3,000. After 4 years of straight-line depreciation, the asset's useful life was revised to 6 years with no change in the estimated salvage value. The depreciation expense in year 5 is:

     a. $2,875.

     b. $5,000

     c. $5,750.

    d. $11,500.

_. The gross margin ratio:

    a. Is also called the net profit ratio.

    b. Indicates the percent of sales revenue remaining to cover operating expenses.

    c. Indicates the % of sales revenue needed to cover all                             expenses.

     d. Indicates the margin of safety below which the firm cannot be   profitable.

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

                             a. $0.

                             b. $75.

                             c. $225

                             d. Some other amount.

Answer 1

$23,000 $3,000 cost of truck 1 salvage value original depreciable value $20,000 / original life of truck original annual depreciation years depreciation recorded tilll date accumulated depreciation till date $2,500 4 $10,000 remaining depreciable value revised remaining life of truck $10,000 2 $5,000 depreciation for year 5 b. $5,000 hence, the correct answer is

the gross margin ratio is calculated by dividing gross margin by sales revenue and the gross margin is calculated by subtracting cost of goods sold from sales revenue. After that, the operating expenses are deducted from the gross margin which provided net operating 2 income. therefore, the gross margin ratio indicates the percent of sales revenue remaining to cover operating expenses b. Indicates the percent of sales revenue remaining to cover operating expenses. hence, the correct answer is

interest expense accrued at December 31 on the note $15,000 * 6% *30/360 $75 3 b. $75 hence, the correct answer is