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ACCOUNTING FOR DEPRECIABLE ASSETS CHALLENGE #6 INSTRUCTIONS: USING THE INFORMATON PROVIDED BELOW 1. CALCULATE THE ANNUAL...

ACCOUNTING FOR DEPRECIABLE ASSETS CHALLENGE #6

INSTRUCTIONS: USING THE INFORMATON PROVIDED BELOW

1. CALCULATE THE ANNUAL DERECIATION FOR THE DEPRECIABLE ASSETS IN 2017

2. PREPARE THE JOURNAL ENTRIES (USING CORRECT DATES AND EXPLANATIONS) THAT ARE NECESSARY TO RECORD THE FOLLOWING:

THE PURCHASE OF THE ASSETS BOUGHT IN 2017

THE DEPRECIATION FOR EACH OF THE DEPRECIABLE ASSETS FOR THE YEAR ENDED DEC. 31, 2017

THE POTENTIAL SALE OF THE TRUCK ON DECEMBER 31, 2020 USING THE INFORMATION PROVIDED

3. ENTER THE POST REFERENCES IN THE JOURNAL FOR JOURNAL ENTRIES PERPARED IN STEP 2.

(NOTE: ONLY INCLUDE POST REFERENCES FOR THE ENTRIES ACTUALLY POSTED).

4. COMPLETE THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017.

(NOTE: CURRENT PORTION OF NOTE PAYABLE IS $52,800)

5. ANSWER QUESTIONS A-D.

IN 2016 AND 2017, FISH & BAIT COMPANY HAD IN THE FOLLOWING TRANSACTIONS FOR FIXED ASSETS:

PURCHASE DATE TRANSACTION DEPRECIATION METHOD LIFE COST SALVAGE VALUE

1/1/2016 PURCHASED LAND N/A N/A $124,225 N/A

6/30/2016 PURCHASE MACHINERY UNITS-OF-PROD. 24,000 HR $132,000 12,000

1/5/2017 PURCHASE TRUCK DD BALANCE 5 YEARS $65,000 6,000

10/1/2017 PURCHASE STORE EQUIP. STRAIGHT-LINE 8 YEARS $80,000 8,000

ADDITIONAL INFORMATION:

THE COMPANY PAID $5,000 CASH FOR THE TRUCK AND SIGNED A LOAN FOR THE REMAINDER OF THE PURCHASE.

THE COMPANY PAID CASH FOR THE STORE EQUIPMENT.

THE MACHINERY WAS ACTUALLY USED FOR THE FOLLOWING NUMBER OF HOURS:

2016 2,900 HOURS

2017 4,100 HOURS

1. CALCULATE DEPRECIATION

use the space provided below to calculate the 2017 depreciation for the machinery:

complete the table below to calculate the annual depreciation for the truck:

YEAR BOOK VALUE AT BEGINNING OF YEAR DEPREC, RATE ANNUAL DEPREC. EXPENSE

2017

2018

2019

2020

2021

(AT THE END OF THE YEAR)

YEAR ACCUM. DEPREC. BOOK VALUE

2017

2018

2019

2020

2021

use the space provided below to calculate the 2017 depreciation for the store equipment:

2. PREPARE JOURNAL ENTRIES

FISH & BAIT COMPANY

GENERAL JOURNAL

DATE( 2017) DESCRIPTION DEBIT CREDIT

ASSUME ON DECEMBER 31, 2020, THE COMPANY SELLS THE TRUCK FOR CASH OF $8,000

PREPARE THE JOURNAL ENTRY TO RECORD THE SALE OF THE TRUCK

Expert Solution

ekkarill92 answered 1 year ago

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