Exam (elaborations)
ACCOUNTING UNIT 4 QUESTIONS AND ANSWERS 2024
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Exam of 2 pages for the course CALA at CALA (ACCOUNTING UNIT 4)
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ACCOUNTING UNIT 4Cala 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. - answerDEBIT- 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= ____/____= - answer(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 - answer
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? - answerBetterment
D- Equipment 22,000
C- Cash 22,000
Ordinary repairs, extraordinary repairs, or betterments?
During the third year, $6,250 cash is paid for normal repairs necessary to keep the
equipment in good working order.
Journal Entry? - answerOrdinary Repair
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