SOLUTION Problem 7-5 to 7-12 Additional Problems

SOLUTION Problem 7-5 to 7-12 Additional Problems - Chapter...

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Unformatted text preview: Chapter 7 Additional Problems SOLUTIONS Property, Plant, & Equipment Problem 7-5 Purchase and Depreciate a New Delivery Truck Speedy Delivery Service, Inc. has always rented their delivery truck. Speedy decided to replace the rented delivery truck by purchasing a new truck. The following are the facts for the new truck Speedy just purchased: Date on which truck was purchased................March 1, 2009 Purchase price.................................................$54,000.00 Method of payment..........................................Cash Estimated life...................................................6 years Estimated value at the end of 6 years.............$0.00 Depreciation method........................................Straight-Line The following is a partial list of the accounts in Speedys General Ledger. These are the only accounts you need for this problem. Cash Truck Accumulated DepreciationTruck Depreciation Expense Put your answers to the following 5 requirements on the Problem 7-5 Answer Forms . Requirement 1 Prepare the General Journal entry to record the purchase of the new delivery truck on March 1, 2009. Requirement 2 Calculate the amount of monthly depreciation for the new truck. Requirement 3 Prepare the March 31 General Journal adjusting entry to record depreciation for the month. Requirement 4 What would be the balance in the Accumulated DepreciationTruck account after the 18 th months depreciation adjusting entry has been made? Requirement 5 If Speedy had estimated that the life of the truck was 4 years, what would have been the amount of monthly depreciation? Chapter 7 Solid Footing Additional Problems Pg. 2 Name: Solution Section: #: Problem 7-5 Answer Forms Requirement 1 March 1 truck purchase Date Account Name Debit Credit 3/1/09 Truck 54,000.00 Cash 54,000.00 Purchase new truck Requirement 2 Monthly depreciation $ 750.00 $54,000 / (6 yrs x 12 mths) = $750 Requirement 3 March 31 depreciation adjusting entry Date Account Name Debit Credit 3/31/09 Depreciation Expense 750.00 Accumulated Depreciation Truck 750.00 March Depreciation adjusting entry Requirement 4 Balance in Accumulated DepreciationTruck after 18 months $ 13,500.00 $750 x 18 mths = $13,500 Requirement 5 Monthly depreciation if life was 4 years $ 1,125.00 $54,000 / (4 yrs x 12 mths) = $1,125 Chapter 7 Solid Footing Additional Problems Pg. 3 Property, Plant, & Equipment Problem 7-6 Purchase and Depreciate Two Items of Property, Plant, & Equipment Recently the Ace Manufacturing Company purchased an office building and a new computer system. Below is the information about these two new items of Property, Plant, & Equipment....
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SOLUTION Problem 7-5 to 7-12 Additional Problems - Chapter...

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