Question

In: Accounting

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 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?

Retained Earnings

Company A

Company B

Company C

Solutions

Expert Solution

Solution - Calculation of Retained Earnings on december 31, 2021
Cost of Each Truck = $82000
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 = ($82000-$6000)/4 = $19000
Depreciation for 4 years = $19000*4 = $76000
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 $82,000 $41,000
Year 2019 $41,000 $20,500
Year 2020 $20,500 $10,250
Year 2021($76000-$41000-$20500-$10250) $10,250 $4,250
Total $76,000
Company C - Units of Production Method
Depreciable amount = ($82000 - $6000) = $76000
Depreciation = Depreciable amount*(Miles used in current year/Total Miles)
Particulars Amount
Depreciation in 2018 ($76000*79000/250000) $24,016
Depreciation in 2019 ($76000*56000/250000) $17,024
Depreciation in 2020 ($76000*51000/250000) $15,504
Depreciation in 2021 ($76000 - $24016 - $17024 - $15504) $19,456
Total Depreciation charged $76,000
Calculation of retained earnings
Particulars Company A Company B Company C
Cash Revenue till 2021 (A) $284,000 $284,000 $284,000
Depreciation till 2021 for each company (B) $70,000 $70,000 $70,000
Retained Earnings (A-B) $214,000 $214,000 $214,000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

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 $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 $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 $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 $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