Question
In: Accounting
Pina Colada Corp. purchased equipment on January 1, 2021 for $148,500. It is estimated that the...
Pina Colada Corp. purchased equipment on January 1, 2021 for
$148,500. It is estimated that the equipment will have a $8,250
salvage value at the end of its 5-year useful life. It is also
estimated that the equipment will produce 165,000 units over its
5-year life.
Answer the following independent questions.
Compute the amount of depreciation expense for the year ended December 31, 2021 using the straight-line method of depreciation.
| Straight-line method | $enter the depreciation expense under the straight-line method for the year ended December 31, 2016 in dollars | per year |
Question Part Score
--/3
If 16,000 units of product are produced in 2021 and 24,000 units are produced in 2022, what is the book value of the equipment at December 31, 2022? The company uses the units-of-activity depreciation method.
| Book value at December 31, 2022 | $enter the book value of the equipment at December 31, 2017 in dollars |
Question Part Score
--/5
If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation—Equipment account at December 31, 2023?
| Accumulated Depreciation—Equipment | enter the balance of the Accumulated Depreciation—Equipment account at December 31, 2018 in dollars |
Solutions
Expert Solution
Based on the information available in the question, we can answer as follows:-
Requirement 1:-
Depreciation expense under Straight Line depreciation method = (Cost of the asset - Salvage value)/Estimated life of the asset
Depreciation expense = ($148,500 - $8,250)/ 5 years
Depreciation expense = $28,050
Requirement 2:-
Units of activity depreciation method = ($148,500 - $8,250)/165,000 units
Units of activity depreciation = $0.85 per unit
Depreciation expense for 2021 = $0.85 per unit * 16,000 units = $13,600
Depreciation expense for 2022 = $0.85 per unit * 24,000 units = $20,400
Book value as on December 31, 2022 = $148,500 - $13,600 - $20,400
Book value as on December 31, 2022 = $114,500
Requirement 3:-
| Year | Depreciation Rate | Depreciable Amount | Depreciation expense (Depreciable amount * 40%) | Accumulated Depreciation | Book value |
| 2021 | 40.00% | 148,500 | 59,400 | 59,400 | 89,100 |
| 2022 | 40.00% | 89,100 | 35,640 | 95,040 | 53,460 |
| 2023 | 40.00% | 53,460 | 21,384 | 116,424 | 32,076 |
| 2024 | 40.00% | 32,076 | 12,830 | 129,254 | 19,246 |
| 2025 | 57.13% | 19,246 | 10,996 | 140,250 | 8,250 |
Depreciation rate = 100/5 years * 2 = 40%
Basd on the above calculation, the Accumulated Depreciation of the equipment as on December 31, 2023 is $116,424
Please let me know if you have any questions via comments and all the best :) !
ekkarill92 answered 5 months agoRelated Solutions
On January 1, 2022, Pina Colada Corp. purchased 5,000 shares of treasury stock. Other information regarding...
On January 1, 2022, Pina Colada Corp. purchased 5,000 shares of
treasury stock. Other information regarding Pina Colada Corp. is
provided as follows.
2022
2021
Net income
$107,700
$100,000
Dividends on preferred stock
$27,895
$27,895
Dividends on common stock
$27,800
$18,950
Weighted-average number of common shares outstanding
36,800
55,000
Common stockholders’ equity beginning of year
$715,000
$550,000
Common stockholders’ equity end of year
$736,000
$715,000
(a)
Compute return on common stockholders’ equity for each year.
(Round answers to 1 decimal...
Pina Colada started her own consulting firm, Pina Colada Corp., on May 1, 2022. The unadjusted...
Pina Colada started her own consulting firm, Pina Colada Corp.,
on May 1, 2022. The unadjusted trial balance at May 31 is as
follows.
Pina Colada Corp.
Trial Balance
May 31, 2022
Account Number
Debit
Credit
101
Cash
$ 4,770
112
Accounts Receivable
6,360
126
Supplies
2,014
130
Prepaid Insurance
3,816
149
Equipment
12,240
201
Accounts Payable
$ 2,332
209
Unearned Service Revenue
2,120
311
Common Stock
21,356
400
Service Revenue
7,950
726
Salaries and Wages Expense
3,604
729
Rent...
The stockholders’ equity accounts of Pina Colada Corp. on January 1, 2017, were as follows. Preferred...
The stockholders’ equity accounts of Pina Colada Corp. on
January 1, 2017, were as follows.
Preferred Stock ( 7%, $ 100 par noncumulative, 4,150
shares authorized)
$ 249,000
Common Stock ($ 5 stated value, 345,000 shares
authorized)
1,437,499
Paid-in Capital in Excess of Par Value—Preferred Stock
12,450
Paid-in Capital in Excess of Stated Value—Common Stock
552,000
Retained Earnings
694,000
Treasury Stock ( 4,150 common shares)
33,200
During 2017, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
Feb....
The stockholders’ equity accounts of Pina Colada Corp. on January 1, 2017, were as follows. Preferred...
The stockholders’ equity accounts of Pina Colada Corp. on
January 1, 2017, were as follows.
Preferred Stock (7%, $100 par noncumulative, 4,150 shares
authorized)
$249,000
Common Stock ($5 stated value, 345,000 shares authorized)
1,437,499
Paid-in Capital in Excess of Par Value—Preferred Stock
12,450
Paid-in Capital in Excess of Stated Value—Common Stock
552,000
Retained Earnings
694,000
Treasury Stock (4,150 common shares)
33,200
During 2017, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
Feb.
1
Issued 4,540...
Pina Colada Corporation uses special strapping equipment in its packaging business. The equipment was purchased in...
Pina Colada Corporation uses special strapping equipment in its
packaging business. The equipment was purchased in January 2019 for
$9.60 million and had an estimated useful life of 8 years with no
residual value. In early April 2020, a part costing $840,000 and
designed to increase the machinery’s efficiency was added. The
machine’s estimated useful life did not change with this addition.
By December 31, 2020, new technology had been introduced that would
speed up the obsolescence of Pina Colada’s...
On December 31, 2020, Pina Colada Corp. estimated that 4% of its net accounts receivable of...
On December 31, 2020, Pina Colada Corp. estimated that 4% of its
net accounts receivable of $455,200 will become uncollectible. The
company recorded this amount as an addition to Allowance for
Doubtful Accounts. The allowance account had a zero balance before
adjustment on December 31, 2020. On May 11, 2021, Pina Colada Corp.
determined that the Jeff Shoemaker account was uncollectible and
wrote off $2,276. On June 12, 2021, Shoemaker paid the amount
previously written off.
Prepare the journal entries...
On January 1, 2021, the Allegheny Corporation purchased equipment for $343,000. The estimated service life of...
On January 1, 2021, the Allegheny Corporation purchased
equipment for $343,000. The estimated service life of the equipment
is 10 years and the estimated residual value is $24,000. The
equipment is expected to produce 296,000 units during its
life.
Required:
Calculate depreciation for 2021 and 2022 using each of the
following methods
1. Sum-of-the-years’-digits (Do not
round intermediate calculations. Round final answers to the nearest
whole dollar amount.)
2. One hundred fifty percent declining balance.
(Round final answers to the...
Prepare the journal entries to record the following sales transactions in Pina Colada Corp.’s books. Pina...
Prepare the journal entries to record the following sales
transactions in Pina Colada Corp.’s books. Pina Colada uses a
perpetual inventory system. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Round answers to 0
decimal places, e.g. 125.)
Jan.
2
Pina Colada sold $45,900 of goods to Xtra Inc., terms 2/10,
n/45, FOB destination. The...
On January 1, 2021, Miller Company leased equipment from Alpha Louse Corp. Alphe Lease Corp purchased...
On January 1, 2021, Miller Company leased equipment
from Alpha Louse Corp. Alphe Lease Corp purchased the equipment at
a cost of $150.000. The agreement specified three
payments of $50,000 beginning January 1, 2021, the beginning of the
lense, and on each December 31 thereafter through 2022. The useful
life of the equipment is estimated to be five years wor's
implicit rate was 5%. The present value of those three payments at
a discount rate of % is $142,971,
On...
(Chapter 3 LO3) The ledger of Pina Colada Corp. on March 31 of the current year...
(Chapter 3 LO3)
The ledger of Pina Colada Corp. on March 31 of the current year
includes the selected accounts, shown below, before quarterly
adjusting entries have been prepared.
Debit
Credit
Prepaid Insurance
$ 1,800
Supplies
3,400
Equipment
18,750
Accumulated Depreciation—Equipment
$ 8,600
Notes Payable
21,000
Unearned Rent Revenue
9,900
Rent Revenue
61,000
Interest Expense
0
Salaries and Wages Expense
11,000
An analysis of the accounts shows the following.
The equipment depreciates $300 per month.
2.
One-third of the unearned...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Question: what is the difference between rights of assertion and observation assertion. Include which financial statements...
- how to read a csv file in php and make a html table? I can't use...
- ABC Inc. is evaluating a project that will increase annual sales by $230,000 and annual cash...
- Identify the behavior, values, and consumption patterns from people in New York City versus Milan Italy.
- A stock has a required return of 10%, the risk-free rate is 4.5%, and the market...
- How do the media options available to advertisers vary in different parts of the world? (Choose...
- Charming Paper Company sells to the 12 accounts listed here. Account Receivable Balance Outstanding Average...
ADVERTISEMENT