Question

32 only What are the three depreciation expenses given the following information

BUILDING-

COMPUTER EQUIP-

OFFICE EQUIP-

Transaction Description of transaction 01. June 1: Byte of Accounting, Inc. issued 2,620 shares of its common stock to Jeremy after $29,960 in cash and computer equipment with a fair market value of $43,400 were received. 02. June 1: Byte of Accounting, Inc. issued 2,122 shares of its common stock after acquiring from Courtney $43,400 in cash, computer equipment with a fair market value of $15,120 and office equipment with a fair value of $896. 03. June 1: Byte of Accounting, Inc. acquired $78,400 in cash from Arynn Cooper and issued 2,800 shares of its common stock. 04. June 2: A down payment of $29,000 in cash was made on additional computer equipment that was purchased for $145,000. A five-year note was executed by Byte for the balance. 05. June 4: Additional office equipment costing $300 was purchased on credit from Discount Computer Corporation. 06. June 8: Unsatisfactory office equipment costing $60 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 07. June 10: Byte paid $22,250 on the balance it owed on the June 2 purchase of computer 08. June 14: A one-year insurance policy covering its computer equipment was purchased by Byte for $6,480 in cash. The effective date of the policy was June 16. 09. June 16: Computer consultation revenue of $6,500 was received. 10. June 16: Byte purchased a building and the land it is on for $113,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $18,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $11,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 11. June 17: Cash of $4,200 was paid for rent for June and July. Put the total amount into the Prepaid Rent account. 12. June 17: Received a bill of $325 from the local newspaper for advertising.

Answer 1

Calculation of depreciation expense for building

From the given details the cost allocated to building is $95,000 ($113,000-$18,000).

Depreciation expense per year = (Cost allocated to building - Salvage Value)/Useful Life

= ($95,000 - $500)/31.5 yrs = $3,000 per year

Depreciation Expense for June = $3,000/12 months = $250 per month

Therefore depreciation expense for building is $250.

Calculation of depreciation expense for computer equipment

Total cost of computer equipment acquired = $43,400 (fair value)+$15,120 (fair value)+$145,000

= $203,520

Depreciation expense per year = (Cost - Salvage Value)/Useful Life

= ($203,520 - $0)/5 yrs = $40,704 per year

Depreciation Expense for June = $40,704/12 months = $3,392 per month

Therefore depreciation expense for computer equipment is $3,392.

Calculation of depreciation expense for office equipment

Total cost of office equipment acquired = $896 (fair value)+$300-$60 = $1,136

Depreciation expense per year = (Cost - Salvage Value)/Useful Life

= ($1,136 - $500)/7 yrs = $90.86 per year

Depreciation Expense for June = $90.86/12 months = $7.57 per month

Therefore depreciation expense for office equipment is $7.57.