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Density Farms, Inc. had sales of $510,000, cost of goods sold of $180,000, selling and...

Question:

Density Farms, Inc. had sales of $510,000, cost of goods sold of $180,000, selling and administrative expense of $68,000, and operating profit of $97,000.

What was the value of depreciation expense?

$165,000
$163,000
$65,000
$174,000

Answer and Explanation:

The calculated value of the depreciation expense is option a. $165,000.

The value of the depreciation expense is given by:

  • = Sales - (cost of goods sold + selling and administrative expenses) - operating profit
  • = $510,000 - ($180,000 + $68,000) - $97,000
  • = $510,000 - $248,000 - $97,000
  • = $165,000

Learn more about this topic:

How to Calculate Depreciation Expense: Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 14
171K

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