Most companies use straight line depreciation for

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Elementary and Intermediate Algebra: Algebra Within Reach
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Chapter 11 / Exercise 20
Elementary and Intermediate Algebra: Algebra Within Reach
Larson
Expert Verified
Most companies use straight-line depreciation for their books but an accelerated method for the tax return. Explain why companies use these two different methods that result in the need for two sets of records.
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Elementary and Intermediate Algebra: Algebra Within Reach
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Chapter 11 / Exercise 20
Elementary and Intermediate Algebra: Algebra Within Reach
Larson
Expert Verified
Newgrange Corporation purchased furniture and fixtures on July 1, 2004, for a total cost of $65,000. Management estimated useful life at 15 years and residual value at $5,000. Straight-line depreciation is used and computed to the nearest whole month. Newgrange Corporation’s year end is December 31.Required:h.Prepare the adjusting entry for depreciation on December 31, 2004.i.When the accumulated depreciation was $10,000, the company determined that they would use the furniture and fixtures for only 7 more years, and then sell the furniture and fixtures for $6,000. Prepare the adjusting entry for depreciation on December 31 using the revised estimate.Solution:
a.Western Atlantic Corporation recently lost some of its accounting records in a fire on August 10, 2004. The following information has been salvaged from the rubble:The $100 par value, Preferred Stock account has a balance of $229,000. The $50 par value, common stock was issued for an average price of $55 per share. The Paid-in Capital in Excess of Par Value-Preferred account has a balance of $22,900. There are 30,000 shares of common stock issued. The Retained Earnings account has a balance of $172,000 on August 10, 2004.Required:a.Determine the number of shares of preferred stock issued.b.What is the balance in the Common Stock account?c.What was the average issue price of a share of preferred stock?d.Determine the balance in the Paid-in Capital in Excess of Par Value-Common account.e.What is total paid-in capital?f.What is total stockholders’ equity?

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