Question

In: Accounting

Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected...

Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6,000. All three trucks were driven 81,000 miles in 2018, 55,000 miles in 2019, 46,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned $65,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation. Answer each of the following questions. Ignore the effects of income taxes. d-1. Calculate the retained earnings on the December 31, 2021, balance sheet?

Solutions

Expert Solution

Solution - Calculation of Retained Earnings on december 31, 2021

Cost of Each Truck = $76000

Estmated Life of each truck = 4 years

Salvage value of all the trucks = $6000

Company A - Straight line Method

Depreciation = (Asset cost - Salvage value)/Estimated Life

Depreciation per year = ($76000-$6000)/4 = $17500

Depreciation for 4 years = $17500*4 = $70000

Company B - Double Declining Method

Depreciation rate under straight line method = 25% as per 4 years

Depreciation under double declining method = 25%*2 = 50%

Particulars Asset cost Depreciation @ 50%
Year 2018 $76000 $38000
Year 2019 $38000 $19000
Year 2020 $19000 $9500
Year 2021 $9500

$3500

($70000 - $38000 - $19000 - $9500)
Total $70000

Company C - Units of Production Method

Depreciable amount = ($76000 - $6000) = $70000

Depreciation = Depreciable amount*(Miles used in current year/Total Miles)

Particulars Amount
Depreciation in 2018 ($70000*81000/250000) $22680
Depreciation in 2019 ($70000*55000/250000) $15400
Depreciation in 2020 ($70000*46000/250000) $12880
Depreciation in 2021 ($70000 - $22680 - $15400 - $12880) $19040
Total Depreciation charged $70000

Calculation of retained earnings

Particulars Company A Company B Company C

Cash Revenue till 2021 (A)

($65000*4 Years)

 $260000 $260000 $260000
Depreciation till 2021 for each company (B) $70000 $70000 $70000
Retained Earnings (A-B) $190000 $190000 $190000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6,000. All three trucks were driven 81,000 miles in 2018, 55,000 miles in 2019, 46,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned $65,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, 2018, for $50,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $50,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 66,000 miles in 2018, 42,000 miles in 2019, 40,000 miles in 2020, and 60,000 miles in 2021. Each of the three companies earned $40,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 80,000 miles in 2018, 60,000 miles in 2019, 45,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $63,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 80,000 miles in 2018, 60,000 miles in 2019, 45,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $63,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, 2018, for $82,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $82,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6,000. All three trucks were driven 79,000 miles in 2018, 56,000 miles in 2019, 51,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned $71,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected...
Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 80,000 miles in 2018, 60,000 miles in 2019, 45,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $63,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company...
Three different companies each purchased trucks on January 1, Year 1, for $60,000. Each truck was...
Three different companies each purchased trucks on January 1, Year 1, for $60,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 79,000 miles in Year 1, 47,000 miles in Year 2, 51,000 miles in Year 3, and 74,000 miles in Year 4. Each of the three companies earned $49,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B...
Three different companies each purchased trucks on January 1, Year 1, for $72,000. Each truck was expected to last four years or 200,000 miles.
Three different companies each purchased trucks on January 1, Year 1, for $72,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $7,000. All three trucks were driven 67,000 miles in Year 1, 42,000 miles in Year 2, 40,000 miles in Year 3, and 62,000 miles in Year 4. Each of the three companies earned $61,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B...
I JUST NEED THE ANSWER, THX. Three different companies each purchased trucks on January 1, 2018,...
I JUST NEED THE ANSWER, THX. Three different companies each purchased trucks on January 1, 2018, for $80,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $4,000. All three trucks were driven 78,000 miles in 2018, 55,000 miles in 2019, 50,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $69,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company...
[The following information applies to the questions displayed below.] Three different companies each purchased trucks on...
[The following information applies to the questions displayed below.] Three different companies each purchased trucks on January 1, Year 1, for $50,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 66,000 miles in Year 1, 42,000 miles in Year 2, 40,000 miles in Year 3, and 60,000 miles in Year 4. Each of the three companies earned $40,000 of cash revenue during each of the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT