ACCOUNTING UNIT 4 [CALA] Test with 100% Correct Answers

ACCOUNTING UNIT 4 [CALA] Test with 100% Correct Answers Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $280,000 for the lot plus $110,000 for the old building. The company pays $33,500 to tear down the old building and $47,000 to fill and level the lot. It also pays a total of $1,540,000 in construction costs—this amount consists of $1,452,200 for the new building and $87,800 for lighting and paving a parking area next to the building. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash. *Ans* DEBIT- Land (280,000+110,000+33,500+47,000) DEBIT- Land Improvements (87,800) DEBIT- Building (1,452,200) CREDIT- Cash (Land+ Improvements+ Building) Straight-Line Depreciation Formula= ____/____= *Ans* (Cost-Salvage Value)/ Estimated Useful Life= Depreciation Expense For revising depreciation you take the (Book value at point of revision) - (Revised Salvage value) = Remaining Depreciable Cost/ (Years of Life Remaining) = Revised annual depreciation *Ans* Ordinary repairs, extraordinary repairs, or betterments? During the second year of the equipment's life, $22,000 cash is paid for a new component expected to increase the equipment's productivity by 10% a year. Journal Entry? *Ans* Bettermen