Question

32. The fixed assets have estimated useful lives as follows: Building - 31.5 years Computer Equipment - 5.0 years Office Equipment - 7.0 years Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building's scrap value is $8,500. The office equipment has a scrap value of $350. The computer equipment has no scrap value. Calculate the depreciation for one month. 33. A review of the payroll records show that unpaid salaries in the amount of $621 are owed by Byte for three days, June 28 - 30. 34. The note payable relating to the June 2, and 10 transactions is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year. IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $140,000. On June 10, eight days later, $26,750 was repaid. Interest expense must be calculated on the $140,000 for eight days. In addition, interest expense on the $113,250 balance of the loan ($140,000 less $26,750 - $113,250) must be calculated for the 20 days remaining in the month of June.] 35. Income taxes are to be computed at the rate of 25 percent of net income before taxes. [IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.]

land is 149,000 and building is valued at 24000

Answer 1

Solution:

32. Fixed assets depreciation by Straight line method:

Building:

Useful life of years = 31.5 years

Therefore, useful life in months = 31.5 * 12 = 378 months

Initial Value of Building = $24,000

Scrap value = $8,500

Depreciation expense per month = (Initial value of asset – Scrap value) / Useful life in months

                                                                = (24000 – 8500) / 378

                                                                = 15,500 / 378

                                                                = $41.01

Land value = $140,000

Land can’t be depreciated because it has no wear and tear. So, the value of land will be same as initial value for all years in the financial statements.

33. The journal entry for unpaid salaries is

                Salaries expense        Dr.$621

                Unpaid salaries          Cr.$621

34.

Annual Interest rate = 12%

Interest rate should be computed based on a 360-day year.

Interest rate for 30 days = 12% / 360 * 30

                                                = 1%

Initial value of computer equipment = $140,000

Interest for 8 days (June 2 – 10) = ($140,000 * 1%) / 30 * 8 days

                                                                = 1,400 / 30 * 8

                                                                = $373.33

Now $26,750 was repaid. So, New balance of loan = $140,000 - $26,750.

                                                                                                = $113,250.

Interest expense for remaining 20 days = ($113,250 * 1%) / 30 * 20 days

                                                                                = 1,132.50 / 30 *20

                                                                                = $755

Total interest expense for the month of June = $373.33 + $755 = $1,128.33

35.

Income tax rate is 25%

Let’s say income tax amount be X

Then income before tax amount well be X / 25%.