In: Accounting
Complete the depreciation schedules. Show all formulas and work. All information is provided but may not neccessarily be needed to comeplete the schedules.
You have been asked to make some recommendations to a company regarding financing for an upcoming major expansion. The company has been very successful but they will need a major inflow of cash to purchase the fixed assets they need for the expansion and hire additional employees. They believe they will need at least $1,500,000 and have asked for your recommendations as to how they should obtain the necessary funds. They have also asked for depreciation schedules for the new assets they plan to purchase. Assume the split between Current Assets and Long Term Assets is 20% current and 80% long term. |
NFT Consulting and Sales Inc | |||
Post Closing Trial Balance | |||
October 31, 2018 | |||
Cash | $ 304,900 | ||
Accounts Receivable | 76,580 | ||
Allowance for Uncollectible Accounts | $ 5,690 | ||
Supplies | 56,500 | ||
Inventory | 68,596 | ||
Prepaid Insurance | 57,890 | ||
Land | 260,000 | ||
Building | 550,000 | ||
Accumulated Depr – Building | 25,650 | ||
Office Equipment | 856,850 | ||
Accumulated Depr – Office Equip | 22,500 | ||
Computer Equipment | 556,500 | ||
Accumulated Depr - Computer Equip | 10,250 | ||
Accounts Payable | 56,560 | ||
Utilities Payable | 16,850 | ||
Wages Payable | 58,950 | ||
Interest Payable | 25,000 | ||
Long term Note Payable | 390,000 | ||
Mortgage Payable | 406,800 | ||
Common Stock ($1 par, 1,000,000, | 400,000 | ||
shares authorized, 400,000 issued | |||
and outstanding) | |||
Retained Earnings | 1,369,566 | ||
$ 2,787,816 | $ 2,787,816 | ||
PLANNED ASSET ACQUISITIONS | ||||||
Reminder that the company’s fiscal year is November 1 through October 31. | ||||||
Asset | Cost | Useful life | Salvage Value | Depreciation Method | Purchase Date | |
Land | 100,000 | N/A | N/A | N/A | 1-Nov-18 | |
Building | 465,500 | 30 | 15,500 | Straight line | 1-Nov-18 | |
Office Equipment | 150,500 | 4 | 10,500 | Straight line | 1-Apr-19 | |
Delivery Equipment | 200,000 | 6 | 20,000 | production | 1-May-19 | |
Additional information related to the $200,000 delivery equipment purchase: It is ESTIMATED that the equipment will be ABLE TO DRIVE 150,000 total miles over its lifetime. To complete the depreciation schedule, PRESUME that the actual miles driven for its useful life are as indicated below. Also, round depreciation expense per unit to the nearest cent and depreciation expense to the nearest dollar. | ||||||
Year 1 | 12,560 | |||||
Year 2 | 32,560 | |||||
Year 3 | 31,650 | |||||
Year 4 | 29,850 | |||||
Year 5 | 26,500 | |||||
Year 6 | 22,350 | |||||
155,470 | ||||||
Building Depreciation Schedule | |||||||
Depreciation for the Year | |||||||
Asset | Dep'ble | Depreciation | Accumulated | Book | |||
Date | Cost | basis | Rate | Expense | Depreciation | Value | |
11/1/2018 | |||||||
10/31/2019 | |||||||
10/31/2020 | |||||||
10/31/2021 | |||||||
10/31/2022 | |||||||
Office Equipment Depreciation Schedule | |||||||
Depreciation for the Year | |||||||
Asset | Dep'ble | Depreciation | Accumulated | Book | |||
Date | Cost | basis | Rate | Expense | Depreciation | Value | |
4/1/2019 | |||||||
10/31/2019 | |||||||
10/31/2020 | |||||||
10/31/2021 | |||||||
10/31/2022 | |||||||
10/31/2023 | |||||||
Delivery Equipment Depreciation Schedule | |||||||
Depreciation for the Year | |||||||
Depreciation | |||||||
Asset | per unit | Units of | Depreciation | Accumulated | Book | ||
Date | Cost | Production | Expense | Depreciation | Value | ||
5/1/2019 | |||||||
10/31/2019 | |||||||
10/31/2020 | |||||||
10/31/2021 | |||||||
10/31/2022 | |||||||
10/31/2023 | |||||||
10/31/2024 | |||||||