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Snowcat [4.5K]
4 years ago
7

In 2018, internal auditors discovered that Fay, Inc., had debited an expense account for the $700,000 cost of a machine purchase

d on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciation is used by Fay. The journal entry to correct the error will include a credit to accumulated depreciation of ___________?
Business
1 answer:
8_murik_8 [283]4 years ago
6 0

Answer:

Explanation:

The correct journal entry is shown below:

Equipment A/c Dr 700,000

      To Accumulated depreciation A/c $420,000

      To Retained earnings A/c $280,000

(Being the error is recorded and the remaining balance is credited to the retained earning account)

The depreciation expense would be

= (Original cost - residual value) ÷ (useful life)  

= ($700,000 - $0) ÷ (5 years)  

= ($700,000) ÷ (5 years)  

= $140,000  

For three years, the depreciation would be

= $140,000 × 3 years

= $420,000

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Gross Company established a $250 petty cash fund on January 1. On March 1, the fund contained $160 in receipts for miscellaneous
OverLord2011 [107]

Answer:

The asset will be decreased by $165.

Explanation:

The entry to replenish the petty cash account will decrease assets - cash by $165, increase miscellaneous expenses by $160 and increase cash shortage by $5. Total equity will decrease by $165.

6 0
3 years ago
GHJ Inc. is investing in a major capital budgeting project that will require the expenditure of​ $16 million. The money will be
lorasvet [3.4K]

Answer:

13.75%

Explanation:

Data provided in the question:

Total expenditure = $16 million

Debt = $2 million

Preferred​ stock = $4 million

Common stock = $10 million

After-tax cost of debt =​ 7% = 0.07

Cost of preferred stock =​ 9% = 0.09

Cost of retained earnings =​ 14%

Cost of new common stock =​ 17%

Now,

Weight of debt = $2 million ÷ $16 million

= 0.125

Weight Cost of preferred stock = $4 million ÷ $16 million

= 0.25

Weight Cost of new common stock = $10 million ÷ $16 million

= 0.625

The weighted average cost of capital for this​ project

= ( 0.07 × 0.125 ) + ( 0.09 × 0.25 ) + ( 0.17 × 0.625)

= 0.00875 + 0.0225 + 0.10625

= 0.1375

or

= 0.1375 × 100%

= 13.75%

5 0
4 years ago
A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain
Maksim231197 [3]

The amount of the gain or loss on disposal of the fixed asset is $2,000.

<h3>Gain or loss on disposal </h3>

First step

Book Value = Original Cost of Equipment - Accumulated Depreciation

Book Value = $30,000 -$28,500

Book value= $1,500

Second step

Gain=Sale Price -Book Value

Gain=$3,500-$1,500

Gain=$2,000

Inconclusion the amount of the gain or loss on disposal of the fixed asset is $2,000.

Learn more about gain or loss on disposal of asset here:brainly.com/question/14542603

8 0
2 years ago
Abraham’s Eatery uses a lunch box supplier that has a sales rep come by weekly to order boxes. Abraham wants a 98% service level
BabaBlast [244]

Answer:

T?he answer is A-There is not enough information to answer the question

Explanation:

5 0
3 years ago
Which of the following are examples of opportunity costs? Check all that apply.
gtnhenbr [62]

The answer is a and c I know this because if you spend time or money on on something you can not do the other and that is exactly what is happening.

7 0
3 years ago
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