Use the Following to Answer Questions

question 27

Multiple Choice

Use the following to answer questions
Farmer Company purchased equipment on January 1,2015 for $82,000.The machines are estimated to have a 5-year life and a salvage value of $4,000.The company uses the straight-line depreciation method.
-If the original expected life remained the same (i.e. ,5-years) ,but at the beginning of 2018,the salvage value was revised to $8,000,the annual depreciation expense for each of the remaining years would be:

• A)$5,440.
• B)$27,200.
• C)$13,600.
• D)$14,800.

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Definitions:

Payment of Account

The process of settling a liability or an amount owed to a creditor, vendor, or supplier by making a cash or electronic payment.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, calculated as sales divided by average accounts receivable.

Days' Sales in Receivables

A financial metric that estimates the average number of days it takes a company to collect payments after a sale has been made.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically comprising the balance sheet, income statement, and cash flow statement.