ACC-302-Ch-13-solutions-practice

ACC-302-Ch-13-solutions-practice - EXERCISES 1324 Purchase...

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EXERCISES 13–24. Purchase of mixer: 2005 Jan. 1 Mixing Equipment ............................................... 54,000 Prepaid Maintenance .......................................... 3,000 Cash ................................................................ 57,000 To record purchase of mixer. Dec. 31 Depreciation Expense ......................................... 6,750* Accumulated Depreciation—Mixing Equipment ...................................................... 6,750 To record depreciation for year. *($54,000/20,000 = $2.70 per hour × 2,500 hrs. = $6,750) 31 Maintenance Expense ......................................... 1,500 Prepaid Maintenance ..................................... 1,500 Assume written off over 2 years of contract. 2006 Dec. 31 Depreciation Expense ......................................... 8,100* Accumulated Depreciation—Mixing Equipment ...................................................... 8,100 *($54,000/20,000 = $2.70 per hour × 3,000 hrs. = $8,100) 31 Maintenance Expense ......................................... 1,500 Prepaid Maintenance ..................................... 1,500
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13–26. 1. Double-declining-balance method: $125,000 × 0.20 × 6/12 = $12,500 2. Productive-output method: $125,000 –18,000 $107,000/500,000 yds. = $0.214 × 77,000 yds. = $16,478 3. Service-hours method: $125,000 –18,000 $107,000/38,000 hrs. = $2.816 × 6,500 hrs. = $18,304 4. Straight-line method: $125,000 –18,000 $107,000 × 0.10 × 6/12 = $5,350 The service-hours method allows the greatest depreciation expense for 2005. 13–28. Description Cost Salvage Base Life Depr. Delivery truck ......... $24,000 $5,000 $19,000 5 yrs. $3,800 Circular saws .......... 900 130 770 7 110 Workbench .............. 320 0 320 8 40 Forklift ..................... 9,000 500 8,500 5 1,700 Totals .................. $34,220 $5,630 $28,590 $5,650 1. $5,650 2. $5,650/$34,220 = 16.51% 3. $28,590/$5,650 = 5.1 years 13–29. 1. 2005 Furniture ......................................................... 35,000 Cash ............................................................. 35,000 Cash ................................................................ 8,000 Accumulated Depreciation—Furniture ........ 19,000 Furniture ...................................................... 27,000 Depreciation Expense ................................... 27,930* Accumulated Depreciation—Furniture ..... 27,930 *[($125,000 + $35,000 – $27,000) × 0.21 = $27,930] 2006 Furniture ......................................................... 27,600 Cash ............................................................. 27,600 Cash ................................................................ 6,000 Accumulated Depreciation—Furniture ........ 9,000 Furniture ...................................................... 15,000
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Depreciation Expense ................................... 30,576* Accumulated Depreciation—Furniture ..... 30,576 *[($133,000 + $27,600 – $15,000) × 0.21 = $30,576] 2007 Furniture ......................................................... 24,500 Cash ............................................................. 24,500 Cash ................................................................ 8,000 Accumulated Depreciation—Furniture ........ 24,000 Furniture ...................................................... 32,000 Depreciation Expense ................................... 29,001* Accumulated Depreciation—Furniture ..... 29,001 *[($145,600 + $24,500 – $32,000) × 0.21 = $29,001] 13–29. (Concluded) 2. Furniture account: Debit Credit Balance Beginning balance ................................ $125,000 2005 purchases ..................................... 35,000 160,000 2005 sales .............................................. 27,000 133,000 2006 purchases ..................................... 27,600 160,600 2006 sales .............................................. 15,000 145,600 2007 purchases ..................................... 24,500 170,100 2007 sales .............................................. 32,000 138,100 Accumulated depreciation—furniture account: Debit Credit Balance Beginning balance ................................ $61,000 2005 sales .............................................. 19,000 42,000 2005 depreciation expense .................. 27,930 69,930 2006 sales .............................................. 9,000 60,930 2006 depreciation expense .................. 30,576 91,506 2007 sales .............................................. 24,000 67,506 2007 depreciation expense .................. 29,001 96,507 13–30. 1. Depreciation for 2000: Main unit— ($62,400/10) × 9/12 = $4,680 Component— ($10,000/6) × 9/12 = 1,250
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$5,930 2. Depreciation for 2006: Main unit— $62,400/10 = $6,240 Component 1— ($10,000/6) × 3/12 = 417 Component 2— $15,250 Cost –3,813 Salvage value $11,437/4 × 9/12 = 2,144 $ 8,801 3. Depreciation for 2007: Main unit— $62,400/10 = $6,240 Component— $11,437/4 = 2,859 $9,099 13–31.
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