Question

If 5 years ago a company bought a $10,500 piece of equipment with $500 salvage value and 10 year usefull life and is using straight-line depreciation what is its book value now? If it revises estimated life to 15 years (10 more years left) what is revised annual depreciation?

What is the cost-allocation account for a natural resourse?

On January 1, Company sells merchandise and collects $5000 in cash which includes 6% sales tax. Journalize the sale.

Company’s employees earned $20,000 for the pay period ending January 31. The Company withholds $1530 FICA, $4373 Federal Income Tax and $585 State Income Tax. Journalize the entry.

On January 1 Company issues a 5 year $1,000,000 face value bond with a 5% annual coupon paid semiannually. The company issues it for $916,884 for an effective interest rate of 7% and uses the effective-interest amortization method. Journalize the issuance:

Answer 1

1. If 5 years ago a company bought a $10,500 piece of equipment with $500 salvage value and 10 year usefull life and is using straight-line depreciation what is its book value now? If it revises estimated life to 15 years (10 more years left) what is revised annual depreciation?

Book Value Now = Cost - Accumulated Depreciation

Book Value Now = $10500 - ((Cost - Salvage)/Useful Life)* Years Used

Book Value Now = $10500 - ((10500 - 500)/10) * 5

Book Value Now = $10500 - 5000

Book Value Now = $5500

Revised annual depreciation = Net Book Value - Salvage) / Remaining life

Revised annual depreciation = 5500 - 500) / 10

Revised annual depreciation = $500

What is the cost-allocation account for a natural resourse?

Depletion method is used in case of natural resource.

Depletion method is a method used to allocate the cost of extracting natural resources such as timber, minerals, and oil from the earth.

On January 1, Company sells merchandise and collects $5000 in cash which includes 6% sales tax. Journalize the sale.

Date	Accounts	Debit	Credit
Jan 1	Cash	$5000
	Sales Tax payable (5000 * 0.06/1.06)		$283
	Sales Revenue		$4717

Company’s employees earned $20,000 for the pay period ending January 31. The Company withholds $1530 FICA, $4373 Federal Income Tax and $585 State Income Tax. Journalize the entry.

Date	Accounts	Debit	Credit
Jan 31	Salaries Expense	$20000
	Federal Income tax Payable		$4373
	FICA Payable		$1530
	State Income tax Payable		$585
	Salaries Payable		$13512

On January 1 Company issues a 5 year $1,000,000 face value bond with a 5% annual coupon paid semiannually. The company issues it for $916,884 for an effective interest rate of 7% and uses the effective-interest amortization method. Journalize the issuance:

Date	Accounts	Debit	Credit
Jan 1	Cash	$916884
	Discount on Bonds Payable	$83116
	5% Bonds Payable		$1000000

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