9. What is the amount of depreciation under cash basis? Dragon Company provided the following data for the current year:Cash sales2,500,000Sales on account850,000Cash purchasesCredit purchases1,700,000400,000750,000Expenses paidAccounts receivable - January 1250,000Accounts receivable – December 31300,000Accounts payable – January 1150,000Accounts payable – December 31Inventory - January 1Inventory - December 31Accrued expenses – December 31Prepaid expenses – December 31Equipment – December 31200,000500,000600,00020,00030,0001,000,00040,00010,000Interest receivedInterest receivable – January 1Interest receivable – December 3120,000On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 downand the balance to be paid after one year.The useful life of equipment is 10 years with no residual value.

Cash basis of accounting is one of the basis of accounting, under which all cash receipts are…

Answered: . What is the amount of depreciation…

Business

Accounting

. What is the amount of depreciation under cash basis?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

9. What is the amount of depreciation under cash basis?

Dragon Company provided the following data for the current year:
Cash sales
2,500,000
Sales on account
850,000
Cash purchases
Credit purchases
1,700,000
400,000
750,000
Expenses paid
Accounts receivable - January 1
250,000
Accounts receivable – December 31
300,000
Accounts payable – January 1
150,000
Accounts payable – December 31
Inventory - January 1
Inventory - December 31
Accrued expenses – December 31
Prepaid expenses – December 31
Equipment – December 31
200,000
500,000
600,000
20,000
30,000
1,000,000
40,000
10,000
Interest received
Interest receivable – January 1
Interest receivable – December 31
20,000
On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down
and the balance to be paid after one year.
The useful life of equipment is 10 years with no residual value.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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