Question

1) The Enterprise purchased an equipment on January 1^st, 2011 that had an estimated useful life of 10 years.The equipment cost $50,000 and estimated residual value was $5,000 at the time of purchase. After three full years of use, the equipment was sold for cash and recognized a $3,000 gain on the sale of that equipment. How much cash did the enterprise receive for the equipment?

2) Aqua Company started the year with the following:

Assets $100,000; Liabilities $60,000; Common Stock $30,000; and a Retained Earnings balance. During the year,

a) The company earned revenue of $200,000. $190,000 of that revenue was collected in cash, the remainder was still outstanding at the end of the year

b) The company started the year with $20,000 in Accounts Receivable, all the amount was collected during the year

c) Aqua Company incurred expenses of $180,000 and 10% of those expenses were unpaid as of the end of the year

d) Aqua company declared and paid dividends of $5,000 during the year

Make the equations in these orders (Table

Item : Assets = Liabilities + Common Stock + Retained Earnings

Beginning Balance Assets = Liabilities + Common Stock + Retained Earnings

A) Assets = Liabilities + Common Stock + Retained Earnings

B) Assets = Liabilities + Common Stock + Retained Earnings

C) Assets = Liabilities + Common Stock + Retained Earnings

D) Assets = Liabilities + Common Stock + Retained Earnings

Ending Balance for Assets = Liabilities + Common Stock + Retained Earnings

Answer 1

	Requirement 1:
A	Equipment Cost	$50,000
B	Residual Value	$5,000
C	Useful life (years)	10
D	Depreciable Cost (A-B)	$45,000
E	Annual Depreciation (D/C)	$4,500
F	Accumulated Depreciation for 3 years (E*3)	$13,500
G	Book Value (A-F)	$36,500
H	Gain on sale of equipment	$3,000
I	Cash received for the equipment (G+H)	$39,500

Requirement 2:
	Assets	=	Liabilities	+	Common Stock	+	Retained Earnings
Beginning Balance	$100,000	=	$60,000	+	$30,000	+	$10,000
During the year
A	$200,000	=		+		+	$200,000
B	$0	=		+		+
C	($162,000)	=	$18,000	+		+	($180,000)
D	($5,000)	=		+		+	($5,000)
	$33,000	=	$18,000	+	$0	+	$15,000
Ending Balance	$133,000	=	$78,000	+	$30,000	+	$25,000

Explanation:

	Assets	=	Liabilities	+	Common Stock	+	Retained Earnings
A	Cash $190,000+						Revenue $200,000+
	Receivables $10,000+
B	Cash $20,000+
	Receivables $20,000-
C	Cash $180,000*90%-		Payable $180,000*10%+				Expenses $180,000-
D	Cash $5,000-						Dividend $5,000-