Assets_Depreciation_Six Questions
Assets_Depreciation_Six Questions
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1.
Chen Company completed the following transactions and events involving its delivery trucks. |
2010 | ||
Jan. | 1 | Paid $25,015 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,300 salvage value. Delivery truck costs are recorded in the Trucks account. |
Dec. | 31 | Recorded annual straight-line depreciation on the truck. |
2011 | ||
Dec. | 31 | Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,850. Recorded annual straight-line depreciation on the truck. |
2012 | ||
Dec. | 31 | Recorded annual straight-line depreciation on the truck. |
Dec. | 31 | Sold the truck for $5,500 cash. |
Required: |
1. Prepare journal entries to record these transactions and events in the given order. |
2.)
Saturn Co. purchases a used machine for $288,000 cash on January 2 and readies it for use the next day at an $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $34,560 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of. |
Required: | |
1. | Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred. |
2. | Prepare journal entries to record depreciation of the machine at December 31. |
(a) | Its first year in operations. |
(b) | The year of its disposal. |
3. | Prepare journal entries to record the machine’s disposal under each of the following separate assumptions |
(a) | It is sold for $23,500 cash. |
(b) | It is sold for $94,000 cash. |
(c) | It is destroyed in a fire and the insurance company pays $34,000 cash to settle the loss claim. |
3.)
Ming Yue Company pays $350,000 for real estate plus $18,550 in closing costs. The real estate consists of land appraised at $218,400; land improvements appraised at $62,400; and a building appraised at $239,200.
Allocate the total cost among the three purchased assets. (Round your percentage answers to a whole number and other answers to the nearest dollar amount. Omit the “$” and “%” signs in your response.)
|
Prepare the journal entry to record the purchase. |
4.)
In early January 2011, LabTech purchases computer equipment for $174,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $36,000. |
Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. (Omit the “$” sign in your response.) |
5.)
Millworks Company owns a milling machine that cost $126,700 and has accumulated depreciation of $90,800. Prepare the entry to record the disposal of the milling machine on January 5 under each of the following independent situations. |
1. | The machine needed extensive repairs, and it was not worth repairing. Millworks disposed of the machine, receiving nothing in return. (Omit the “$” sign in your response.) |
2. | Millworks sold the machine for $15,600 cash. (Omit the “$” sign in your response.) |
3. | Millworks sold the machine for $35,900 cash. (Omit the “$” sign in your response.) |
4. | Millworks sold the machine for $41,900 cash. (Omit the “$” sign in your response.) |
6.)
In early January 2011, LabTech purchases computer equipment for $147,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at $30,000. |
Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation. (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” and “%” signs in your respons |