- 1. El Dorado Foods Inc. owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have experienced declining profits due to market saturation in the area. As a result, management gathered data about possible impairment of the assets of the stores. The information gathered was as follows:
Book value: $17.5 million
Fair value: $14.9 million
Undiscounted sum of future cash flows: $16.5 millionRequired: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets.
$1 million $1.6 million $14.9 million $2.6 million 2. Meca Concrete purchased a mixer on January 1 for a cost of $45,000. Straight line depreciation was used for years one and two based on an estimated eight year life and $3,000 estimated residual value. In the third year of use, Meca revised its estimate and now believes the mixer will have a total service life of only six years, and that the residual value will be only $2,000.
Required: Compute depreciation for the third year
$9,187.50 $7,375 $8,625 $8,125 - 3. First quarter credit sales totaled $700,000. The state sales tax rate is 4% and the local sales tax rate is 2%. The journal entry to record the sales shall include:
Debit accounts receivable $700,000; credit sales $700,000 Debit accounts receivable $742,000; credit sales $742,000 Debit accounts receivable $742,000; credit sales $700,000; credit sales tax payable $42,000 Debit accounts receivable $700,000; credit sales $700,000; credit sales tax payable $42,000
- 3. First quarter credit sales totaled $700,000. The state sales tax rate is 4% and the local sales tax rate is 2%. The journal entry to record the sales shall include:
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