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Chapter 9 Homework

# Chapter 9 Homework - Rachel L Gates ACC-240 Chapter 9...

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Rachel L. Gates ACC-240 Chapter 9 Homework Assignment E9-4 Recording Straight-Line Depreciation & Repairs 1.) The adjustment for depreciation made at the end of 2009: Accumulated Depreciation—110,000 / \$10,000 (Estimated Residual Value) = 11 years Cost of Manufacturing Equipment = \$160,000 Residual Value = \$10,000 150k x 1/15 = 10k Useful Life = 15 Years DEPRECIATION EXPENSE = \$10,000 2.) The two expenditures for repairs and maintenance during January 2010: Item Assets Liabilities Stockholders’ Equity Manf. Equip. Depreciation Expense - 10,000 (+E, -SE) Accumulated Depreciation - 10,000 (+xA,-A) Maintenance & Repairs -1,850 (+E,-SE) Cash for Maint. & Repairs -1,850 (-A) Equipment Overhaul +21,000 (+A) Cash for Equipment Overhaul -21,000 (-A) E9-5 Determining Financial Statement Effects of Straight-Line Depreciation and Repairs 1.) Give the adjusting journal entry that would have been made at the end of 2009 for depreciation on the manufacturing equipment: dr Manufacturing Equipment Expense (+E,-SE) .................................. 10,000 cr Accumulated Depreciation (+xA,-A) ................................................. 10,000 2.) Starting at the beginning of 2010, what is the remaining estimated life?

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15 years Estimated Useful Life - 11 years Used 4 years Useful Life Remaining 3.) Give the Journal Entries to record the two expenditures for repairs and maintenance during 2010. dr Maintenance & Repairs (+E,-SE) .................................... 1,850 cr Cash (-A) .......................................................................... 1,850 dr Equipment Overhaul (+A) ..................................................... 21,000 cr Cash (-A) .......................................................................... 21,000 E9-14 Computing and Interpreting the fixed asset turnover ratio from a financial analysts perspective. 1.) Compute Apple’s fixed asset turnover ratio for 06-07-08: Formula: Net Sales Revenue Avg. Net Fixed Assets 2006 19,315 19,315 1281 +817/2 1,049 = 18.4 2007 24,006 24,006 1832 +1281/2 1556.5 = 15.4 2008 32,479 32,479 2455 +1832/2 2143.5 = 15.2
2.) Was Apple able to maintain its strong financial performance in recent years when the economy was beginning to falter? The fixed asset turnover analysis shows that Apple maintained an increase in sales revenue throughout 2006, 2007 and 2008; however; they were generating less for each dollar invested in their fixed assets. In 2006 – Apple was shown as most efficient in Asset Turnover in comparison to the two following years.

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