Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $37,530. The equipment was expected to have a useful life of three years, or 4,860 operating hours, and a The estimated value of a fixed asset at the end of its useful life.residual value of $1,080. The equipment was used for 900 hours during Year 1, 1,700 hours in Year 2, 1,500 hours in Year 3, and 760 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.straight-line method, (b) A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset. units-of-output method, and (c) the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

b. Units-of-output method

c. Double-declining-balance method

In five years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan determined the following:

1. A building in which a car wash could be installed is available under a five-year lease at a cost of $5,300 per month.

2. Purchase and installation costs of equipment would total $400,000. In five years the equipment could be sold for about 10% of its original cost.

3. An investment of an additional $9,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere.

4. Both a wash and a vacuum service would be offered. Each customer would pay $1.25 for a wash and $.55 for access to a vacuum cleaner.

5. The only variable costs associated with the operation would be 7.5 cents per wash for water and 10 cents per use of the vacuum for electricity.

6. In addition to rent, monthly costs of operation would be: cleaning, $3,800; insurance, $75; and maintenance, $1,895.

7. Gross receipts from the wash would be about $4,000 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum.

Mr. Duncan will not open the car wash unless it provides at least a 13% return.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts from its operation.

2-a. Determine the net present value using the net present value method of investment analysis.

2-b. Would you advise Mr. Duncan to open the car wash?

Home Hardware reported beginning inventory of twenty six shovels, for a total cost of $156. The company had the following transactions during the month:

Required:
1. Prepare the journal entries that would be recorded using a periodic inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

A.Sold 8 shovels on account at a selling price of $14 per unit

B.Sold 14 shovels on account at a selling price of $14 per unit

C.Bought 9 shovels on account at a cost of $6 per unit

D.Sold 12 shovels on account at a selling price of $14 per unit

E.Bought 14 shovels on account at a cost of $6 per unit

F. Record the cost of goods sold

G.Record the inventory on hand based on inventory count

2. Prepare the journal entries that would be recorded using a perpetual inventory system, including any book-to-physical adjustment that might be needed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

A. Record the sale of shovels.

B.Record the cost of shovels sold.

C.Record the sale of shovels.

D. Record the cost of shovels sold.

E. Record the purchase of shovels.

F. Record the sale of shovels.

G.Record the cost of shovels sold.

H.Record the purchase of shovels.

I.Record the entry for book-to-physical adjustment, if any.

3-a. What is the dollar amount of shrinkage that you were able to determine in requirement 1? (Enter "0" if you were unable to determine the dollar amount of shrinkage.)

Amount of shrinkage -

3-b. What is the dollar amount of shrinkage that you were able to determine in requirement 2? (Enter "0" if you were unable to determine the dollar amount of shrinkage.)

Amount of shrinkage -

3-a. What is the dollar amount of shrinkage that you were able to determine in requirement 1? (Enter "0" if you were unable to determine the dollar amount of shrinkage.)

assignment

With her decision to expand Salty Pawz, Wanda needs a workforce. However, she has never interviewed or hired anyone in her life. While putting labels on bags of dog treats one afternoon, you ask Wanda how she intends to recruit and select her workforce. She smiles and says, “Well for once, I have a plan!” You can’t wait to hear her plan and feel like maybe after all this time she is getting the hang of running Salty Pawz like a business should be run.

Wanda’s plan is to place an ad in a local newspaper and have people who are interested in learning more stop by the local coffee shop to speak with her. She thinks that filling out application forms at this point is premature, so she will have them leave their name and phone number in her planner for now. Wanda doesn’t have any particular questions in mind to ask the applicants. Instead, she thinks it is more natural to just let the conversations evolve, so she can figure out who she “clicks with.” She doesn’t want them to feel like they are being interrogated! However, she is particularly interested in hiring mothers with younger school age children who can start work after they drop their kids at school. She also is going to keep her eyes open for at least one young man because sacks of flour are heavy. The only thing she is certain about is asking each person for his or her salary requirements, so she can set her pay schedule and budget accordingly.

Your Task

• Explain to Wanda why virtually everything in this hiring plan is a bad idea based on the key role that Human Resource Management plays in the success of her business.
• Be sure to inform Wanda about the laws that govern the employer-employee relationship and what could happen if she became the subject of an employee lawsuit. (For reference, Wanda’s business is located in the state of North Carolina.)

Enter the following balances in a general ledger format as of December 1.
11-cash $161,800. 12- Accounts Receivable 12,940. 14- Maintenance Supplies 10,850. 15- Office Supplies 4,900. 16- Office Equipment 28,500. 17- Accum.Depr-Office Equipment 6,900. 18-Vehicles 95,000. 19- Accum.Depr.-Vehicles14,700. 21-Accounts Payable 3,920. 31- S.Holmes Capital 289,250.
32- S.Holmes, Drawing _ 41- Fees Earned _ 51- Drivers Salaries expense_ 52- Maintenance Supplies Exp. _ 53- Fuel Expense_ 53- Office Salaries Expense_ 62- Rent Expense _ 63- Advertising Expense_ 64- Micellaneous Administrative Expense_
Question 1- Journalize the transactions for December using Cash receipts journal,Purchases journal, with colums for Accounts Payable,Maintenance Supplies,Office Supplies and other Accounts.
Single-colum revenue journal,cash payments journal and two-colum general journal.Assume that the daily postings to individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.
Question 2- Post the appropriate individual entries to the general ledger.
Question -4 Total each of the colums of special journals and post the appropriate totals to the general ledger; insert the account balances.
Question -3 Prepare a trial balance.

The transactions completed by Revere Courier Company during December, the first month of the fiscal year, were as follows.
Dec 1- Issued Check No. 610 for December rent, $4,200. 2- Issued Invoice No.940 to Clifford Co. $1,740. 3- Received check for $4,800 from Ryan Co. in payment of account.
5- Purchased a vehicle on account from Platinum Motors, $37,300. 6- Purcased office equipment on account from Austin Computer Co. , $4,500. 6- Issued Invoice No. 941 to Ernesto Co., $3,870. 9- Issued Check No. 611 for fuel expense. $600. 10- Received check from Sing Co. in payment of $4,040 invoice.
10- Issued Check No.612 for $330 to Office To Go Inc. in payment of invoice. 10- Issued Invoice No.942 to Joy Co., $1,970. 11- Issued Check No. 613 for $3,090 to Essential Supply Co. in payment of account. 11- Issued Check No.614 for $500 to Porter Co. in payment of account. 12- Received check from Clifford Co. in payment of $1,740 invoice of December 2.
13- Issued Check No. 615 to Platinum Motors in payment of $37,300 balance of December 5
16- Issued Check No. 616 for $39,800 for cash purchase of a vehicle. 16- Cash fees earned for December 1-16, $20,300. 17- Issued Check No. 617 for miscellaneous administrative expense, $500. 18- Purchased maintenance supplies on account from Essentials Supply Co., $1,750. 19- Purchased the following on account from McClain Co,: maintenance supplies, $1,500; office supplies, $375. 20- Issued Check No. 618 in payment of advertising expense, $1,780. 20- Used $3,200 maintenance supplies to repair delivery vehicles. 23- Purchased office supplies on account from Office To Go Inc, $400. 24- Issued Invioce No. 943 to Sing Co. $6,100. 24- Issued Check No. 619 to S. Holmes as personal withdrawal, $3,000. 25- Issued Invoice No. 944 to Ernesto Co. $5,530. 25- Received Check for $4,100 from Ryan Co. in payment of balance. 26- Issued check No.620 to Austin Computer Co. in payment of $4,500 invoice of December 6. 30- Issued check No.621 for monthly salaries as follows: drivers salaries, $16,900; office salaries,$7,100.
Dec-31.Cash fees earned for December 17-31, $18,900. 31- Issued Check No. 622 in payment for office supplies, $340.

The transactions completed by Revere Courier Company during December,the first month of the fiscal year, were as follows.
Dec 1. Issued Check No.610 for December rent, $4,200.
Dec 2. Issued Invoice No.940 to Clifford Co. $1,740.
Dec 3 Received check for $4,800 from Ryan Co. in payment of account.
Dec 5. Purchased a vehicle on account from Platinum Motors, for $37,300.
Dec 6. Purchased office equipment on account from Austin Computer Co.$4,500.
Dec 6. Issued Invoice No. 941 to Ernesto Co.$3,870.
Dec 9. Issued Check No.611 for fuel expense, $600.
Dec 10. Received Check from Sing Co. in payment of $4,040 invoice.
Dec 10. Issued Check No.612 for $330 to Office To Go Inc in payment of invoice.
Dec 10. Issued Invoice No. 942 to Joy Co. $1,970.
Dec 11. Issued Check No. 613 for $3,090 to Essential Supplies Co. in payment of account.
Dec 11. Issued Issued No.614 for $500 to Porter Co. in payment of account.
Dec 12. Received Check from Clifford Co. in payment of $1,740 invoice of December 2.
Dec 13. Issued Check No.615 to Platinum Motors in payment of $37,300 balance of December 5.
Dec 16. Issued Check No.616 for $39,800 for cash purchase of a vehicle.
Dec 16. Cash fees earned for December 1-16, $20,300.
Dec 17. Issued Check No.617 for miscellaneous administrative expense, $500.
Dec 18. Purchased maintenance supplies on account from Essentials Supply Co. $1,750.
Dec 19. Purchased the following on account from McClain Co.,: maintenance supplies, $1,500, office supplies, $375.
Dec 20. Issued Check No. 618 in payment of advertising expense, $1,780.
Dec 20. Used $3,200 maintenance supplies to repair delivery vehicles.
Dec 23. Purchased office supplies on account from Office to Go Inc, $400.
Dec 24. Issued Invoice No.943 to Sing Co., $6,100.
Dec 24. Issued Check No.619 to S. Holmes as a personal withdrawal, $3,000.
Dec 25. Issued Invoice No.944 to Ernesto Co. $5,530.
Dec 25. Received check for $4,100 from Ryan Co. in payment of balance.
Dec 26. Issued Check No. 620 to Austin Computers Co. in payment of $4,500 invoice of December 6.
Dec 30. Issued Check No. 621 for monthly salaries as follows: driver salaries, $16,900; office salaries, $7,100.
Dec 31. Cash fees earned for December 17-31, $18,900.
Dec 31. Issued Check No.622 in payment for office supplies, $340.

Question 1- Journalize the transactuons for December using Cash Receipts journal,with colums for Accounts Payable, Maintenance Supplies, Office Supplies and Other Accounts.
Single- Colum revenue journal,Cash payments journal and two colum general journal.
Assume that the daily postings to individual accounts in the accounts payable subsidiary Ledger and account receivable subsidiary Ledger have been made.
Question 2- Post the appropriate individual entries to the general Ledger.
Question 3 - Total each of the colums of special journals and post the appropriate totals to the general Ledger, insert the account balances.
Question 4- Preparr a trail balance .

Mr. Wharton, the owner of the store, is unhappy with the operating results. an analysis of other operating costs reveals that it includes $45,000 variable costs, which vary with sales volume, and $20,000 (fixed) costs.

Requirement 1

Determine the formula to calculate the contribution margin, then enter the amounts in the formula to compute the contribution margin of Wharton Mens Clothing

____ - ______ = Contribution Margin

Requirement 2

Compute the contribution margin percentage.

Requirement 3

Mr. Whartron estimates that he can increase units sold, and hence revenues by 25% by incurring additional advertising costs of $15,000. calculate the impact of the additional advertising costs on operating income

Requirement 4

What other actions can Mr. Wharton take to improve operating income?

for non corporate taxpayer other than farmers, fishermen, certain household employer and certain high income taxpayers, business owners expecting to owe at least $1000 after withholding and definable credit, should make estimated tax payments of at least:

What is a related party transaction? Provide examples of transactions that would be considered related-party transactions and then locate an example of a related party transaction that has been questioned in a company and what were the end results?

Little TownLittle TownPizza bought a used Ford delivery van on January​ 2,20182018​, for$ 21 comma 800$21,800. The van was expected to remain in service for four years left parenthesis 48 750(48,750 miles). At the end of its useful​ life, Little TownLittle Town management estimated that the​ van's residual value would be $ 2 comma 300$2,300. The van traveled 1500015,000 miles the first​ year, 1700017,000 miles the second​ year, 1250012,500 miles the third​ year, and 42504,250 miles in the fourth year.

Problem 16-1A Indirect: Statement of cash flows LO A1, P1, P2, P3

Rachel is an engineer who practices as a sole proprietor. This year, Rachel had net business income of $500,000 from her business. Assume that Rachel pays $20,000 wages to her employees, she has $500,000 of property (unadjusted basis of equipment she purchased last year), has no capital gains, and her taxable income before the deduction for qualified business income is $380,000. Calculate Rachel's deduction for qualified business income.

To prepare for this discussion review the chapter reading assignments. While doing the reading think about your responses to the identified questions, AND respond to your colleagues’ postings in one or more of the following ways:

• Ask a probing question.
• Share an insight from having read your colleague’s posting.
• Offer and support an opinion.
• Validate an idea with your own experience.
• Make a suggestion.
• Expand on your colleague’s posting.

Tammy Potter, a new partner with the regional CPA firm of Tower & Tower, was recently appointed to the board of directors of a local civic organization. The chairman of the board of the civic organization is Lewis Edmond, who is also the owner of a real estate development firm Tiera Corporation.

Potter was quite excited when Edmond indicated that his corporation needed an audit and he wished to discuss the matter with her. During the discussion, Potter was told that Tiera Corporation needed the audit to obtain a substantial amount of additional financing to acquire another company. Presently, Tiera Corporation is successful, profitable, and committed to growth. The audit fee for the engagement should be substantial.

Since Tierra Corporation appeared to be a good client prospect. Potter tentatively indicated that Tower & Tower wanted to do the work. Potter then mentioned that Tower & owner’s quality control policies require an investigation of new clines and approved by the managing partner, Lee Tower.

Potter obtained the authorization of Edmond to make the necessary inquires for the new client investigation. Edmond was found to be a highly respected member of the community. Also, Tiera Corporation was highly regarded by tis banker and its attorney, and the Dun & Bradstreet report on the corporation reflected nothing negative.

As a final part of the investigation process, Potter contacted Edmond’s former tax accountant, Bill Tuner. Potter was reprised to discover that Turner did not share the others’ high opinion of Edmond. Turner related that on an IRS audit 10 years ago, Edmonds’ former tax accountant, Bill Turner. Potter was surprised to discover that Turner did not share the others’ high opinion of Edmond. Turner related that on an IRS audit 10 years ago. Edmond was questioned about the details of a large capital loss reported on the sale of a tract of land to a trust. Edmond told the IRS agent that he had lost all the supporting documentation for the transaction, and they had no way of finding out the names of the principals of the trust. A search by an IRS auditor revealed that the land was recorded in the name of Edmond’s married daughter and that Edmond himself was listed as the trustee. The IRS disallowed the loss and Edmond was assessed a civil fraud penalty. Potter was concerned about these findings, but eventually concluded that Edmond has probably matured to a point where he would not engage in such activities.

1. Present arguments supporting a decision to accept Tiera Corporation as an audit client.
2. Present arguments supporting a decision NOT to accept Tierra Corporation as an audit client.

Assuming that you are Lee Tower, set forth your decision regarding acceptance of the client, identifying those arguments from pat (a) or pat (b) that you found most persuasive.

Build a table showing the three companies and the three ratios and conduct an analysis of comparison.

1. Based on your interpretation of the ratios, which companies seem to be doing better and why?
2. Are your findings and interpretations consistent with how you viewed the company prior to your research? If not, what is different and why?
3. What unanswered questions do the ratios not address and how might you go about addressing these questions?

Exercise 14-20 Installment note; amortization schedule [LO14-3]

American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. In payment for the $4.3 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Prepare the journal entry for American Food Services’ purchase of the machine on January 1, 2018.
2. Prepare an amortization schedule for the four-year term of the installment note.
3. Prepare the journal entry for the first installment payment on December 31, 2018.
4. Prepare the journal entry for the third installment payment on December 31, 2020.

Explain the difference between Limited and Reasonable Assurance, also give one example of each.
Need Examples and evaluated answer.