Three different companies each purchased trucks on January 1, Year 1, for $82,000. Each truck was expected to last four years or250,000 miles. Salvage value was estimated to be $7,000. All three trucks were driven 79,000 miles in Year 1, 56,000 miles in Year 2,51,000 miles in Year 3, and 71,000 miles in Year 4. Each of the three companies earned $71,000 of cash revenue during each of thefour years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C usesunits-of-production depreciation.Answer each of the following questions. Ignore the effects of income taxes.Requireda-1. Calculate the net income for Year 1a-2. Which company will report the highest amount of net income for Year 1?b-1. Calculate the net income for Year 4.b-2. Which company will report the lowest amount of net income for Year 4?c-1. Calculate the book value on the December 31, Year 3, balance sheetc-2. Which company will report the highest book value on the December 31, Year 3, balance sheet?d-1. Calculate the retained earnings on the December 31, Year 4, balance sheet.d-2. Which company will report the highest amount of retained earnings on the December 31, Year 4, balance sheet?e. Which company will report the lowest amount of cash flow from operating activities on the Year 3 statement of cash flows?Complete this question by entering your answers in the tabs below.Required A Required Ba-1a 1. Calculate the net income for Year 1. (Round "Per Unit Cost" to 3 decimal places)a-2. Which company will report the highest amount of net income for Year 13a-2Required C Required DCompany ACompany BCompany CHighest net incomeRequired ENet IncomeRequired B >

Net Income refers to the total revenue or earnings generated by a company after deducting all…

a 1. Calculate the net income for Year 1. (Round "Per Unit Cost" to 3 decimal places a-2. Which company will report the highest amount of net income for Year 12 a-1 a-2 Company A Company B Company C Highest net income Net Income

a 1. Calculate the net income for Year 1. (Round "Per Unit Cost" to 3 decimal places a-2. Which company will report the highest amount of net income for Year 12 a-1 a-2 Company A Company B Company C Highest net income Net Income

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

Three different companies each purchased trucks on January 1, Year 1, for $82,000. Each truck was expected to last four years or
250,000 miles. Salvage value was estimated to be $7,000. All three trucks were driven 79,000 miles in Year 1, 56,000 miles in Year 2,
51,000 miles in Year 3, and 71,000 miles in Year 4. Each of the three companies earned $71,000 of cash revenue during each of the
four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses
units-of-production depreciation.
Answer each of the following questions. Ignore the effects of income taxes.
Required
a-1. Calculate the net income for Year 1
a-2. Which company will report the highest amount of net income for Year 1?
b-1. Calculate the net income for Year 4.
b-2. Which company will report the lowest amount of net income for Year 4?
c-1. Calculate the book value on the December 31, Year 3, balance sheet
c-2. Which company will report the highest book value on the December 31, Year 3, balance sheet?
d-1. Calculate the retained earnings on the December 31, Year 4, balance sheet.
d-2. Which company will report the highest amount of retained earnings on the December 31, Year 4, balance sheet?
e. Which company will report the lowest amount of cash flow from operating activities on the Year 3 statement of cash flows?
Complete this question by entering your answers in the tabs below.
Required A Required B
a-1
a 1. Calculate the net income for Year 1. (Round "Per Unit Cost" to 3 decimal places)
a-2. Which company will report the highest amount of net income for Year 13
a-2
Required C Required D
Company A
Company B
Company C
Highest net income
Required E
Net Income
Required B >

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