Question

Selected ledger account balances for Success Systems follow.

   

		For Three Months Ended December 31, 2013			For Three Months Ended March 31, 2014
	Office equipment	$	8,300		$	8,300
	Accumulated depreciation—Office equipment		415			830
	Computer equipment		24,000			24,000
	Accumulated depreciation—Computer equipment		1,500			3,000
	Total revenue		32,234			45,800
	Total assets		84,060			120,668

   

Required

1.	Assume that Success Systems does not acquire additional office equipment or computer equipment in 2014. Compute amounts for the year ended December 31, 2014, for Depreciation Expense—Office Equipment and for Depreciation Expense—Computer Equipment (assume use of the straight-line method).

     

2.	Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2014?

     

3.	Compute the three-month total asset turnover for Success Systems as of March 31, 2014. (Round your answer to 2 decimal places.)

     

Answer 1

Requirement 1
Depreciation expense for the year ended December 31, 2014
	For three months ended December 31, 2013	For three months ended March 31, 2014	Depreciation for 3 months	Depreciation Expense for year ended December, 31 2014
Accumulated Depreciation -Office equipment	415	830	415	1,660
				(415*4)
Accumulated Depreciation -Computer equipment	1,500	3,000	1,500	6,000
				(1500*4)
Requirement 2
	Office Equipment	Computer Equipment
Book Value as on December 31, 2013	8300	24000
Accumulated Depreciation	2,075	7,500
Book Value as on December 31, 2014	6,225	16,500
Requirement 3
Formula
Total Asset turnover = Net sales / Average fixed Assets
Three month total asset turnover = 45,800/( (84,060+120,668)/2)
Three month total asset turnover = 0.45 times