Marks Consulting Purchased Equipment Costing $45,000 on January 1, Year

question 168

Multiple Choice

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a:

• A) Debit to accumulated depreciation for $22,500.
• B) Credit to loss on sale for $10,000.
• C) Credit to cash for $20,000.
• D) Debit to loss on sale for $10,000.
• E) Debit to gain on sale for $2,500.

Identify and explain the implications of different inventory turnover ratios.

Understand the effects of using different inventory cost formulas like FIFO, average cost, and specific identification under varying market conditions.

Recognize the factors that influence the inclusion of goods in the physical count of inventory.

Understand the accounting treatment for goods held on consignment.

---

Definitions:

Tchebysheff's Theorem

A statistical theorem stating that, for any real-valued random variable, the proportion of values lying within k standard deviations from the mean is at least 1-1/k^2, for k > 1.

Empirical Rule

A statistical guideline suggesting that within a normal distribution, nearly every data point can be found within three standard deviations of the central mean.

Stem-And-Leaf Plot

A graphical method for displaying quantitative data, where each number is split into a "stem" (the leading digit(s)) and a "leaf" (the last digit).

Mode

The value that appears most frequently in a data set.