Question

An asset was purchased for $71,000 and originally estimated to have a useful life of 10 years with a residual value of $3,400. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $1,360.

a. Determine the amount of the annual depreciation for the first two years.
$

b. Determine the book value at the end of Year 2.
$

c. Determine the depreciation expense for each of the remaining years after revision.
$

3.

CHART OF ACCOUNTS
Lucite Company
General Ledger
ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Alan Albertson 122 Accounts Receivable-Jim Dobbs 123 Accounts Receivable-John Groves 124 Accounts Receivable-Jan Lehn 125 Accounts Receivable-Jacob Marley 126 Accounts Receivable-Mr.Potts 127 Accounts Receivable-Chad Thomas 128 Accounts Receivable-Andrew Warren 129 Allowance for Doubtful Accounts 131 Interest Receivable 132 Notes Receivable-Alan Albertson 141 Inventory 145 Supplies 151 Prepaid Insurance 181 Land 191 Equipment 192 Accumulated Depreciation LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense 523 Delivery Expense 524 Repairs Expense 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

General Journal

Journalize the entry for the transaction on November 14. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

Journalize the entry for the transaction on December 31. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places. Assume a 360-day year when calculating interest.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

Journalize the entry for the transaction on February 12. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places. Assume a 360-day year when calculating interest.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

Answer 1

Asset Cost Residual value Useful life 71,000 3,400 Years Depreciation under straight line method = (Cost - Residual value) / Useful life =($ 71,000 - $ 3,400) / 10 years 6,760 Depreciation expense for the first year | $ 6,760 Depreciation expense for the Seond year $ Revised useful life Revised residual value Asset Cost Accumulated depreciation at the end of Less: second year Book value at the end of second year 6,760 2 Years 1,360 71,000 (13,520 ($ 6,760 *2 years) 57,480 Depreciation expense after revision (Cost - Accumulated depreciation - Revised residual value ) / Revised Remaining useful life =(71,000-13520-1360) / 2 28,060

Credit Accounts tittle Depreciation expense Accumulated depreciation Debit $ 28,060 $ 28,060 Accounting equation Date Post Ref Debit Credit Assets Description Depreciation expense Accumulated depreciation Liabiliti Equity $(28,060) 28,060 $ 28,060 $28,060