Question

159 ACCOUNTING FOR DEPRECIABLE ASSETS Instructions: Using the information provided below: 1. Calculate the annual depreciation for the depreciable assets in 2017. 2. Prepare the journal entries (using correct dates and explanations) that are necessary to record the following: • the purchase of the assets bought in 2017 • the depreciation for each of the depreciable assets for the year ended Dec. 31, 2017 • the potential sale of the truck on December 31, 2020 using the information provided 3. Enter the post references in the journal for journal entries pepared in Step 2. (note: only include post references for the entries actually posted). 4. Complete the financial statements for the year ended December 31, 2017 (NOTE: current portion of note payable is $52,800) 5. Answer questions a-d. Life In 2016 and 2017, Fish & Bait Company had in the following transactions for fixed assets: Depreciation Purchase Date Transaction Method Cost 1/1/2016 Purchased land NA N/A $ 124,225 6/30/2016 Purchased machinery Units-of-prod. 24,000 hours $ 132,000 1/5/2017 Purchased truck DD balance 5 years I $ 65,000 10/1/2017 Purchased store equip. Straight-line 1 8 years $ 80,000 Salvage Value N/A 12.000 6,000 8,000 Additional information: • The company paid $5,000 cash for the truck and signed a loan for the remainder of the purchase. • The company paid cash for the store equipment. • The machinery was actually used for the following number of hours: 2016 2,900 hours 2017 4,100 hours

Answer 1

19 Tuesday (019-347) Wx04 Annual Depreciatioon for Depreciable Assets in 2017 - Land 7 No Depreciation machinery Y cost of machinery -sallenge (Depreciation Estimated howes X Actual USL in lunch 132000 - 12000 4100 trs. 26000 town NO 120,000 X 4100 24000 then - Res. 20.500 Bore 7 Truck Book value of Truck cost of Truck Salvage value Depreciation) NO. No. of years wechase it. 01/05/2017 (usetful life) 05/01/2017 19 mm -65000 (atst may -5years/12montas 7 X5 years 31st De (2017) montas Oosth Jan Never memorize something that you can look up.

21 Thursday (091-3453 W 04 65000 12 I as the ASSRI-1 edofirst-year, the refore Bookvalue = Cost value (4 13,000 stores Equipment cost of Asset - Salvage (pepreciation) No. of life fusefu 80,000 -sovo 8 years Lunch gooo As the stores Equipment was bought- 1/2017 10 on to foi 2017 therefore this Assel- list was used from 9 356 days Depreciation for stores in the year 2017 wil 9000 x 356days - 365days 9000X 3 = 2250 Words are, of course, the most powerful drug used by mankind.

19 Tuesday (019-347) Wx04 Annual Depreciatioon for Depreciable Assets in 2017 - Land 7 No Depreciation machinery Y cost of machinery -sallenge (Depreciation Estimated howes X Actual USL in lunch 132000 - 12000 4100 trs. 26000 town NO 120,000 X 4100 24000 then - Res. 20.500 Bore 7 Truck Book value of Truck cost of Truck Salvage value Depreciation) NO. No. of years wechase it. 01/05/2017 (usetful life) 05/01/2017 19 mm -65000 (atst may -5years/12montas 7 X5 years 31st De (2017) montas Oosth Jan Never memorize something that you can look up.

Du actual Howes red in 2017 If we consider that sale of Truck wire ke at 31/12/202, then No. of useful life = 3 years from 2017. then depreciation - 65000-6000 - 3 years = 19,667 h approx 20,000 No. months used fraction in date ignored. Depreciation is calculated taking montas of use of Assets) Isn't it nice to think that tomorrow is a new day with no mistakes in it yet?

24 25 26 27 28 20 21 126 Saturday 23-343) WkD4 21 22 29 12 n 42,750 31 2017 20,500 20,000 Depreciation - Dr. 37,945- To accumulated Debreciation on machinery a acciemulated depreciation on Truck u Accumulated depreciation on stores 2,250 - office pent Ledger # Annual al Activity 94000 By Retained Earning 24000 Sunday

24 25 26 27 Thursday (021-345) Wk04 Tas the ASSR-ison 65000 12 the first year, the refore = cost Bookvalue = ca valuel value Lunch - 13,000 1 stores Equipment cost of Asset - Salvage (Depreciation - No. of life usefu 80.000 – 8000 е је 9000 As the stores Equipment was bought- 110 on to foll 2017 on therefore this assel- rolist was used from one to 1 356 days 311129 Debreciation for stores in the year 2017 wi 9000 x 356days ft - 9000 x 3 = 2250 Words are, of course, the most powerful drug used by mankind.

Friday 22 on) Ws nnual A Depreciation SO for Defrociable Assets in 2017 anton for Depsen Land NIL Machinery 20, 500 ing sale Truck! 20500 8,867 20.00043,500 Siniones Equipment- 8,778 (approx) 2,250 371945 35,750 + 42,750 Journal e for the year 31/12/2017 Date particulans Lif. Dr. er 01/05/2017 Truck Ale-Dr. 65000 To Cash Ale 5000 To Loan Ale 60,000 (Being Truck Parchased after Cash payment and remaining amo unl- tramferred to Loan) 11 2017 Stones Equipment Dr. 80,000 - To Cash Are 8001 Being Stones purchased talough Cash) Tell the duth, or someone will tell it for you.

January 2016 su malo 26 Tuesday 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 (026-340) Wk 05 By cross profi132920 return I (10,70,050-725350 ustones supportive svol Lunch и Retained farning Ale as to office Rent 24000 By balance bold 805200 u Salaries 85000 u office supplies 1650 Csales cost of 1910 usales salaries 128 500 goods sold) 12 expenses - 15,500 expenses u utilities 17500 1. Expenses uk Baddebt 1950 u Advertising 14150 Expenses 1 Allowance, 2000 tare doubtfulfte To dividend 12000 Toaleurtulated 7745 นาวา เกตที่ 50 u Interest 10,450 exhemes a kind of from

January 2016 Wednesday 27 to balance eld gameso calosing balande) 900 (89,250 5,34,400 5,34,490 - As per sum hedger posting depreciation = 20500 +26000 + 2252 = 48.7507

ISUU 10 Fish & Bait company Balance sheet for the year ended 31/12/2017 Assets. Current Assets 189,820 plant Assets Lunch 124,225 Land Stores Equipment- 80,000 Is Accumulated 2250 Depreciation 77,750 Machinery 132010 S. Accumulated 35000 depreciation - 97000 337975 65,000 29000 uro 30 is accumulated 26.000 depreciation Intangible Assets 64,350 go each day by the harvest you top but by the seeds that you

Friday (029-337) Wk05 Liabilities current liabilities Long term 83,755 178, 800 262,555 stockholders Equity common stoel 140,540 Retained Earnings 189250 329790 592 345 ering what you do, and filling how you do y

January 2016 Wednesday 27 to balance eld gameso calosing balande) 900 (89,250 5,34,400 5,34,490 - As per sum hedger posting depreciation = 20500 +26000 + 2252 = 48.7507

ISUU 10 Fish & Bait company Balance sheet for the year ended 31/12/2017 Assets. Current Assets 189,820 plant Assets Lunch 124,225 Land Stores Equipment- 80,000 Is Accumulated 2250 Depreciation 77,750 Machinery 132010 S. Accumulated 35000 depreciation - 97000 337975 65,000 29000 uro 30 is accumulated 26.000 depreciation Intangible Assets 64,350 go each day by the harvest you top but by the seeds that you

Monday (032-334) WK 06 cumulala cost - 132001 2000 deprecation) Accumula 9 00 3) a Book value of (cost- Accumulation) machinery • 31/12/2016 - 132000 - 12ooo X 12.000D x 2400 13 2000- 240vo - 14,500 (depreciation 132000 117500 = 6) Book value of stones on 31/12/2017 77,750 . Yes, the Leven after truck can be lesed fully depreciation. 1 In 2022, depn on Truck will be the rest of Book value as 20.22 is the last year to depreciate Inow what worse luck your bod luck has saved you from

Saturday (030-138) w as 17 18 19 20 34 35 2 Statement of cash flows. = 20,110 Net cash flow from operating activities (10,31,470 - 10,11,660) to investing (85000) activines u u financing " (82,750) • Add cash at beginning 110320 31 Sunday cash and cash x 27,570 equivalents at the end of the period pene solves a problem. A wise penon

Monday (032-334) WK 06 cumulala cost - 132001 2000 deprecation) Accumula 9 00 3) a Book value of (cost- Accumulation) machinery • 31/12/2016 - 132000 - 12ooo X 12.000D x 2400 13 2000- 240vo - 14,500 (depreciation 132000 117500 = 6) Book value of stones on 31/12/2017 77,750 . Yes, the Leven after truck can be lesed fully depreciation. 1 In 2022, depn on Truck will be the rest of Book value as 20.22 is the last year to depreciate Inow what worse luck your bod luck has saved you from

Monday (032-334) WK 06 cumulala cost - 132001 2000 deprecation) Accumula 9 00 3) a Book value of (cost- Accumulation) machinery • 31/12/2016 - 132000 - 12ooo X 12.000D x 2400 13 2000- 240vo - 14,500 (depreciation 132000 117500 = 6) Book value of stones on 31/12/2017 77,750 . Yes, the Leven after truck can be lesed fully depreciation. 1 In 2022, depn on Truck will be the rest of Book value as 20.22 is the last year to depreciate Inow what worse luck your bod luck has saved you from