Question

PART III-PL Instructions: Complete the requirements specified ¡or each situations (28 points) 1. Jumpstart Deliveries acquired a truck at a cost of $64 expected to have a salva on January 1, 2014. The truck uses the straight-line 2015. ivage value of $8,000 at the end of its 4-year useful life. Jumpstart thdPrepare the journal entry to record annual depreciation for Prepare Dec.si Oeprectahun Expense 14 ouv Acu mutated Depreciaron 14-ao e The cost was $480,000 of which DynaChrome paid $80,000 in cash as a and signed a 7% mortgage for the remainder. DynaChrome immediately had unusabl Ors bought two acres of land with an old office building on it that was down the old building razed Attorneys were paid $1,100 connectio building plans for the new building cost permits and zoning variances necessary DynaChro $42,000 payment in connection with the purchase. The architect's fee for drawing $6,800. DynaChrome paid $3,100 in connection with at a net cost of $8,700 and sold the salvaged materials for $2,200 prior to construction of the new building. me paid the contractor $1.420,000 for construction of the new building, along with for a parking lot and necessary A. At what amount should the land be recorded? walkways and driveways. B. At what amount should the new office building be recorde d? On July 1, 2014, Winslow Enterprises s $33,000. The equipment was purchased January straight-line method over a five-year useful life with a $9,000 salvage value. Prepare the old equipment with an original cost of $86,000 for 1, 2011, and was depreciated using the 3. journal entry to record the sale of the equipment. Sonic Company bought machinery on January 1, 2009, at a cost of $90,000. The machinery had an estimated life of 8 years and salvage value of $16,000. On January 1, 2014, Sonic estimates that the machinery will have a life of only 2 more years from January 1, 2014, and the salvage value is now estimated to be $4,000. Sonic uses straight-line depreciation. Compute the annual depreciation expense for 2014. .

Answer 1

ANSWER-1)

Dr. Depreciation Expense $14,000

Cr. Accumulated Depreciation $14,000

Working: [($64,000 - $8,000) / 4] = $14,000

　

ANSWER-2)

A) Solution: $487,600

Working: $480,000 + $8,700 - $2,200 + $1,100 = $487,600

B) Solution: $1,429,900

Working: $6,800 + $3,100 + $1,420,000 = $1,429,900

　

ANSWER-3)

Dr. Cash $33,000

Dr. Accumulated Depreciation $53,900

Cr. Office Equipment $86,000

Cr. Gain on Disposal of Plant Assets $900

Working: [(($86,000 - $9,000) / 5) * 3.5 years)] = $53,900

　

ANSWER-4)

Revised annual depreciation
Accumulated depreciation at 1/1/14	46,250
(($90,000 - $16,000) / 8) * 5
Book value, 1/1/14	43,750
(($90,000 - $46,250)
Minus: New salvage value	4,000
Depreciable cost	39,750
Remaining useful life	2 yrs.
Annual depreciation-Revised	19,875