17. Mohamed Company purchased a delivery truck for $30,000 on January 1, 2012. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2012 and 12,000 in 2013. Instructions (a) Compute depreciation expense for 2012 and 2013 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (b) Assume that Mohamed uses the straight-line method. (1) Prepare the journal entry to record 2012 depreciation. (2) Show how the truck would be reported in the December 31, 2012, balance sheet. 18. The Fahim Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Ahmed $45,000 and Bader $20,000. The firm is liquidated, and $110,000 in cash is received for the noncash assets. Ahmed and Bader income ratios are 60% and 40%, respectively. Instructions Prepare a schedule of cash payments.

17. Mohamed Company purchased a delivery truck for $30,000 on January 1, 2012. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2012 and 12,000 in 2013. Instructions (a) Compute depreciation expense for 2012 and 2013 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (b) Assume that Mohamed uses the straight-line method. (1) Prepare the journal entry to record 2012 depreciation. (2) Show how the truck would be reported in the December 31, 2012, balance sheet. 18. The Fahim Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Ahmed $45,000 and Bader $20,000. The firm is liquidated, and $110,000 in cash is received for the noncash assets. Ahmed and Bader income ratios are 60% and 40%, respectively. Instructions Prepare a schedule of cash payments.

Name: 17. Mohamed Company purchased a delivery truck for $30,000 on January
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Description: 17. Mohamed Company purchased a delivery truck for $30,000 on January 1, 2012. The truckhas an expected salvage value of $2,000, and is expected to be driven 100,000 miles over itsestimated useful life of 8 years. Actual miles driven were 15,000 in

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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