Question 1

On January 1, 2017 Baker purchased a new stamping machine for its plant. This new piece of equipment cost $120,000 and was recorded in Baker's accounting system with a $120,000 debit to the Equipment account and a $120,000 credit to the Cash account. Baker estimates that the stamping machine will last 5 years and will have no value at the end of those 5 years. At the end of January, February, March, April, and May, Baker made the correct depreciation adjusting entries.

Select the June 30, 2017 adjusting entry Baker should make for June’s depreciation:

(A) Accumulated depreciation: 2,000 ________

depreciation: expense _______ 2,000

(B) depreciation expense 12,000 _______

accumulated depreciation: ______ 12,000

(C) depreciation expense 2,000 ______

accumulated depreciation ______ 2,000

(D) depreciation espense 24,000 ________

cash _______ 2,000

loss of equipment ________ 22,000

(E) None of the above

PART 1A

If Baker did not make the above June 30 adjusting entry for depreciation:

The errors on the Income Statement for June would be:

items understated: Depreciation Expense, Total Expenses

item overstated: Net Income



The errors on the June 30 Balance Sheet would be:

item understated: Accumulated Depreciation

items overstated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity

The errors on the Income Statement for June would be:

item understated: Net Income

items overstated: Depreciation Expense, Total Expenses



The errors on the June 30 Balance Sheet would be:

items understated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity

item overstated: Accumulated Depreciation

The errors on the Income Statement for June would be:

items understated: Depreciation Expense, Net Income

item overstated: Total Expenses



The errors on the June 30 Balance Sheet would be:

items understated: Accumulated Depreciation, Total Assets, Total Liabilities and Equity

items overstated: Retained Earnings, Total Equity

a and b

none of the above

PART1B

Baker pays its employees each Friday for the work that they performed that week. On June 30, Baker owes its employees $3,400 for 3 days of work the employees performed after the last Friday payday in June. This $3,400 will be paid to the employees in July.

The current balance in the Wages Payable account is $0.

Select the adjusting entry Baker should make as of June 30, 2017 related to these 3 days of unpaid wages:

Wages Payable 3,400

Wages Expense 3,400

Wages Expense 3,400

Wages Payable 3,400

Wages Expense 3,400

Cash 3,400

No adjusting entry is required

None of the above

If Baker did not make the above June 30 adjusting entry for Wages owed to employees:

The errors on the Income Statement for June would be:

items understated: Wages Expense, Total Expenses

item overstated: Net Income



The errors on the June 30 Balance Sheet would be:

items understated: Wages Payable, Total Liabilities

items overstated: Retained Earnings, Total Equity

The errors on the Income Statement for June would be:

item understated: Net Income

items overstated: Wages Expense, Total Expenses



The errors on the June 30 Balance Sheet would be:

item understated: Cash

items overstated: Wages Payable, Total Liabilities

The errors on the Income Statement for June would be:

items understated: none

items overstated: Wages Expense, Total Expenses, Net Income



The errors on the June 30 Balance Sheet would be:

items understated: Wages Payable, Total Liabilities

items overstated: Cash, Total Liabilities and Equity

There would not be any errors, as no adjusting entry is required.

Name: Question 1 On January 1, 2017 Baker purchased a new stamping machine
Uploaded: 2024-03-05T11:50:36.000Z
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Description: Question 1 On January 1, 2017 Baker purchased a new stamping machine for its plant. This new piece of equipment cost $120,000 and was recorded in Baker's accounting system with a $120,000 debit to the Equipment account and a $120,000 credit to the C

Question

Question 1

On January 1, 2017 Baker purchased a new stamping machine for its plant. This new piece of equipment cost $120,000 and was recorded in Baker's accounting system with a $120,000 debit to the Equipment account and a $120,000 credit to the Cash account. Baker estimates that the stamping machine will last 5 years and will have no value at the end of those 5 years. At the end of January, February, March, April, and May, Baker made the correct depreciation adjusting entries.

Select the June 30, 2017 adjusting entry Baker should make for June’s depreciation:

(A) Accumulated depreciation: 2,000 ________

depreciation: expense _______ 2,000

(B) depreciation expense 12,000 _______

accumulated depreciation: ______ 12,000

(C) depreciation expense 2,000 ______

accumulated depreciation ______ 2,000

(D) depreciation espense 24,000 ________

cash _______ 2,000

loss of equipment ________ 22,000

(E) None of the above

PART 1A

If Baker did not make the above June 30 adjusting entry for depreciation:
1. The errors on the Income Statement for June would be:
  
  items understated: Depreciation Expense, Total Expenses
  
  item overstated: Net Income
  
  The errors on the June 30 Balance Sheet would be:
  
  item understated: Accumulated Depreciation
  
  items overstated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity
2. The errors on the Income Statement for June would be:
  
  item understated: Net Income
  
  items overstated: Depreciation Expense, Total Expenses
  
  The errors on the June 30 Balance Sheet would be:
  
  items understated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity
  
  item overstated: Accumulated Depreciation
3. The errors on the Income Statement for June would be:
  
  items understated: Depreciation Expense, Net Income
  
  item overstated: Total Expenses
  
  The errors on the June 30 Balance Sheet would be:
  
  items understated: Accumulated Depreciation, Total Assets, Total Liabilities and Equity
  
  items overstated: Retained Earnings, Total Equity
4. a and b
5. none of the above
  
  PART1B
  Baker pays its employees each Friday for the work that they performed that week. On June 30, Baker owes its employees $3,400 for 3 days of work the employees performed after the last Friday payday in June. This $3,400 will be paid to the employees in July.
  
  The current balance in the Wages Payable account is $0.
  
  Select the adjusting entry Baker should make as of June 30, 2017 related to these 3 days of unpaid wages:
  Wages Payable 3,400
  
  Wages Expense 3,400
  
  Wages Expense 3,400
  
  Wages Payable 3,400
  
  Wages Expense 3,400
  
  Cash 3,400
  
  No adjusting entry is required
  
  None of the above

If Baker did not make the above June 30 adjusting entry for Wages owed to employees:
The errors on the Income Statement for June would be:

items understated: Wages Expense, Total Expenses

item overstated: Net Income



The errors on the June 30 Balance Sheet would be:

items understated: Wages Payable, Total Liabilities

items overstated: Retained Earnings, Total Equity

The errors on the Income Statement for June would be:

item understated: Net Income

items overstated: Wages Expense, Total Expenses



The errors on the June 30 Balance Sheet would be:

item understated: Cash

items overstated: Wages Payable, Total Liabilities

The errors on the Income Statement for June would be:

items understated: none

items overstated: Wages Expense, Total Expenses, Net Income



The errors on the June 30 Balance Sheet would be:

items understated: Wages Payable, Total Liabilities

items overstated: Cash, Total Liabilities and Equity

There would not be any errors, as no adjusting entry is required.

Accepted Answer

Answer 1 :
 
Option (C) is the correct answer

Depreciation expense [120000/5) / 12]
$2,000…