Younger Bus Lines - Research Paper Example

HW#10 Start 15 Nov 2008 at 08:00 PM Due 27 Nov 2008 at 01:00 AM Access after Due Yes. Mark Late Graded: Yes E10-2Trudy Company incurred the following costs. 1.Sales tax on factory machinery purchased$5,0002.Painting of and lettering on truck immediately upon purchase7003.Installation and testing of factory machinery2,0004.Real estate broker's commission on land purchased3,5005.Insurance premium paid for first year's insurance on new truck8806.Cost of landscaping on property purchased7,2007.Cost of paving parking lot for new building constructed17,9008.

Cost of clearing, draining, and filling land13,3009.Architect's fees on self-constructed building10,000Instructions Indicate to which account Trudy would debit each of the costs. 1.Machinery Account2.Truck Account3.Machinery Account4.Land Account5.Truck Account6.Property Account7.Building Account8.Land Account9.Building AccountE10-5Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2008, at a cost of $168,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles.

Salvage value is expected to be $8,000.Compute the depreciation cost per unit. (Round answer to 2 decimal places.) $1.60 per mile [(168000 - 8000)/100000]Prepare a depreciation schedule assuming actual mileage was: 2008, 26,000; 2009, 32,000; 2010, 25,000; and 2011, 17,000. ComputationEnd of YearYearUnits ofActivityDepreciationCost/Uint=AnnualDepreciationExpenseAccumulatedDepreciationBookValue 200826000$ 1.60$ 41,600$$200932000$ 1.60$ 51,200201025000$ 1.60$ 40,000201117000$ 1.60$ 27,200E10-6Kelm Company purchased a new machine on October 1, 2008, at a cost of $120,000.

The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year life. Instructions Compute the depreciation expense under the following methods for the year indicated.Straight-line for 2008. $ 21,600 [(120,000 - 12,000)/5]Units-of-activity for 2008, assuming machine usage was 1,700 hours. (Round unit price per hour to 2 decimal places.) $ 18,360 [{(120,000 - 12,000)/10,000} x 1,700]Declining-balance using double the straight-line rate for 2008 and 2009.

2008$ 48,000 [120,000 x 20% x 2]2009$ 28,800 [(120,000-48000) x 20% x 2]E10-7Brainiac Company purchased a delivery truck for $30,000 on January 1, 2008. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2008 and 12,000 in 2009.Compute depreciation expense for 2008 and 2009 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method.

Assume that Brainiac uses the straight-line method. (1) Prepare the journal entry to record 2008 depreciation. (2) Show how the truck would be reported in the December 31, 2008, balance sheet. Description/AccountDebitCreditDepreciation Expense - Vehicles$ 3500 Accumulated Depreciation - Vehicles$ 3500Cost of Vehicle - Truck30000Less: Accumulated Depreciation3500$26500E10-9Presented below are selected transactions at Ingles Company for 2008. Jan. 1Retired a piece of machinery that was purchased on January 1, 1998.

The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.June 30Sold a computer that was purchased on January 1, 2005. The computer cost $40,000. It had a useful life of 5 years with no salvage value. The computer was sold for $14,000.Dec. 31Discarded a delivery truck that was purchased on January 1, 2004. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.Instructions Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of.

Ingles Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2007.) (List multiple debit/credit entries in descending order of amount.) DateDescriptionDebitCreditJan. 1Accumulated Depreciation - Machinery62,000 Machinery Account62,000June 30Depreciation Expense - Computer4,000 Accumulated Depreciation - Computer4,000June 30Accumulated Depreciation - Computer28,000 Cash14,000 Computer Account40,000 Gain on Disposal of Computer2,000Dec. 31Depreciation Expense - Delivery Truck6,000 Accumulated Depreciation - Delivery Truck6,000Dec.

31Accumulated Depreciation - Delivery Truck30,000 Loss on disposal of Truck9000 Delivery Truck 39,000E10-10Beka Company owns equipment that cost $50,000 when purchased on January 1, 2005. It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years. Instructions Prepare Beka Company's journal entries to record the sale of the equipment in these four independent situations.Sold for $28,000 on January 1, 2008. (List multiple debit/credit entries in descending order of amount.) DescriptionDebitCreditAccumulated Depreciation27,000Cash28,000 Equipment Account50,000 Gain on Sale of Equipment5,000Sold for $28,000 on May 1, 2008.

(List multiple debit/credit entries in descending order of amount.) DescriptionDebitCreditDepreciation Expense - Equipment3,000 Accumulated Depreciation - Equipment3,000Accumulated Depreciation - Equipment30,000Cash28,000 Equipment Account50,000 Gain on Sale of Equipment8,000Sold for $11,000 on January 1, 2008. (List multiple debit/credit entries in descending order of amount.) DescriptionDebitCreditAccumulated Depreciation27,000Loss on Sale of Equipment12,000Cash11,000 Equipment Account50,000Sold for $11,000 on October 1, 2008.

(List multiple debit/credit entries in descending order of amount.) DescriptionDebitCreditDepreciation Expense - Equipment6,750 Accumulated Depreciation - Equipment6,750Accumulated Depreciation - Equipment33,750Cash11,000Loss on Sale of Equipment 5,250 Equipment Account50,000P10-2AIn recent years, Juresic Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected.

BusAcquiredCostSalvageValueUseful Lifein YearsDepreciation Method11/1/06$96,000$6,0005Straight-line21/1/06120,00010,0004Declining-balance31/1/07 80,000 8,0005Units-of-activityFor the declining-balance method, the company uses the double-declining rate. For the units-of activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were: 2007, 24,000; 2008, 34,000; and 2009, 30,000.Compute the amount of accumulated depreciation on each bus at December 31, 2008.

Bus 1$54,000Bus 2$105,000Bus 3$34,800If bus no. 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2006 and (2) 2007 2006$45,0002007$37,500Copyright 2000-2008 by John Wiley & Sons, Inc. or related companies. All rights reserved.