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QUESTION 1 Equipment with a cost of $75,809.00, an estimated residual value of $4,582.00, and an...

QUESTION 1

Equipment with a cost of $75,809.00, an estimated residual value of $4,582.00, and an estimated life of 13 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

QUESTION 2

The Boxwood Company sells blankets for $ 37.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date	Blankets	Units	Cost
May 03	Purchase	8	$15.00
May 10	Sale	4
May 17	Purchase	14	$18.00
May 20	Sale	5
May 23	Sale	3
May 30	Purchase	10	$20.00

Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

QUESTION 3

On June 8, Alton Co. issued an $86,600, 7%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using a 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the following year? When required, round your answer to the nearest dollar.

Expert Solution

QUESTION 1

Equipment with a cost of $75,809.00, an estimated residual value of $4,582.00, and an estimated life of 13 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

Dep. charged till now :- ( 75809 - 4582 ) / 13 years = $ 5479 per year

for 4 years = 5479 * 4 = $ 21916

Book value at the end of 4th year = 75809 - 21916 = $ 53893

Now, changes introduced are:-

remaining useful life i.e ( 13 - 4 ) 9 years should be shortened by 3 years i.e ( 9 - 3 ) 6 years

residual value changed to zero

So, new dep. = ( 53893 - 0 ) / 6 = $ 8982

The depreciation expense for the current and future years is $ 8982.

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ekkarill92 answered 1 year ago

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