Amortization/Depreciation Expense
Quentin's Balance Sheet
Assets
Current Assets
Cash 42,000
Inventory 36,000
Prepaid Expense 12,000
Total Current Assets 90,000
Non Current Assets
Plant and Equip (net) 56,000
Patents (net) 24,000
Total Assets 170,000
Liabilities
Current Liabilities
Accounts Payable 30,000
Short term debt 42,000
Total current 72,000
Non Current Liab
Bonds Payable 34,000
Owners Equity
Common Stock 20,000
Retained Earnings 44,000
Total Liabilities and Equity 170,000
Questions:
Quentin began 2004 with the following non-current asset balances: Plant and equipment (net)
$59,000; Patent (net) $28,000. No long-term assets were purchased or sold during the year.
How much amortization and depreciation expense did Quentin record during 2004?
A. Cannot be estimated
B. $3,000
C. $7,000
D. $4,000
***My Answer: C (7,000). Because in the question it states plant and equipment balances of 59,000 yet on the balance sheet it notes 56,000 which results in a $3,000 difference. In the question it also notes 28,000 in patent assets yet in the balance sheet it shows 24,000 for a difference of $4,000. I added those two up to get the difference of $7,000.
20. Quentin's 2004 net income was $5,000. No dividends were declared or paid during 2004. What
was Quentin's retained earnings balance on December 31, 2003?
A. Cannot be estimated
B. $39,000
C. $34,000
D. $49,000
My Answer: B because RE = Beginning RE +net income -dividends
