ACCTSol79.pdf - 33 Award 1.00 point Ronny's Red Hat Company...

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33. Award: 1.00 point 34. Award: 1.00 point Ronny's Red Hat Company purchased machinery on July 3, Year 1 for $150,000. Ronny, the owner, estimated that the machinery would be sold for $20,000 in 10 years. If Ronny's red Hat Company uses straight line depreciation, what is included in the entry to record the disposition of the asset on August 31, Year 3 if the machinery is sold for $115,000 cash? Dr. Loss on disposition $334 Dr. Loss on disposition $6,834 Cr. Gain on disposition $4,000 Dr. loss on disposition $4,000 Dr. Loss on disposition $2,500 Year 1 depreciation: $150,000 – $20,000 / 10 / 2 = $6,500 Year 2 depreciation: $150,000 – 20,000 / 10 = $13,000 Year 3 depreciation: $150,000 – 20,000 / 10 * 8/12 = $8,666 Total A.A. at disposition: $ 28,166 Dr. A.A. 28,166 Dr. Cash 115,000 Dr. Loss on disposition 6,834 Cr. Asset 150,000 A company buys land and building for $250,000. The market value of the land is $150,000 and the building is $50,000. What cost will be allocated to the building? $62,500 $150,000 $187,500 $250,000 None of the other alternatives are correct Proportionate allocation: $150,000 / $200,000 = 0.75 x $250,000 = $187,500
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  • Depreciation, Accumulated Depreciation account, Dr. Loss, Ronny

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