07 - SOLUTION Problems 7-1 to 7-8

07 - SOLUTION Problems 7-1 to 7-8 - Problem 7-1 Solution...

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Problem 7-1 Solution Requirement 1 – March 1 truck purchase Date Account Name Debit Credit 3/1/11 Truck 54,000 Cash 54,000 Purchase new truck Requirement 2 – Monthly depreciation $750 $54,000 / (6 yrs x 12 mths) = $750 Requirement 3 – March 31 depreciation adjusting entry Date Account Name Debit Credit 3/31/11 Depreciation Expense 750 Accumulated Depreciation – Truck 750 March Depreciation adjusting entry Requirement 4 – Balance in Accumulated Depreciation–Truck after 18 months $13,500 $750 x 18 mths = $13,500 Requirement 5 – Monthly depreciation if life was 4 years $1,125 $54,000 / (4 yrs x 12 mths) = $1,125
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Problem 7-2 Solution Requirement 1 – April 1 office building purchase Date Account Name Debit Credit 4/1/11 Building 1,200,000 Cash 150,000 Note Payable 1,050,000 Purchase Building Requirement 2 – Monthly depreciation for the office building $2,000 $1,200,000 / (50 yrs x 12 mths) = $2,000 Requirement 3 – April 30 depreciation adjusting entry for the office building Date Account Name Debit Credit 4/30/11 Depreciation Expense 2,000 Accumulated Depreciation – Building 2,000 April Depreciation adjusting entry for the building Requirement 4 – May 1 computer system purchase Date Account Name Debit Credit 5/1/11 Computer 58,800 Cash 58,800 Purchase computer
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Problem 7-2 Solution (continued) Requirement 5 – Monthly depreciation for the computer system $700 $58,800 / (7 yrs x 12 mths) = $700 Requirement 6 – May 31 depreciation adjusting entry for the computer system Date Account Name Debit Credit 5/31/11 Depreciation Expense 700 Accumulated Depreciation – Computer 700 May Depreciation adjusting entry for the computer Requirement 7 – May 31 depreciation adjusting entry for the office building Date Account Name Debit Credit 5/31/11 Depreciation Expense 2,000 Accumulated Depreciation – Building 2,000 May Depreciation adjusting entry for the building Requirement 8 – Total Depreciation Expense on the May Income Statement $2,700
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Problem 7-3 Solution Requirement 1 – July 1 purchase of supplies Date Account Name Debit Credit 7/1/11 Supplies 1,315 Cash 1,315 Purchase supplies Requirement 2 – July 31 supplies on-hand $1,097 Shop Towels 80 x $4 = $320 Degreasing Fluid
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07 - SOLUTION Problems 7-1 to 7-8 - Problem 7-1 Solution...

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