Golden Manufacturing Company started operations by acquiring $89,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $79,000 cash, had an expected useful life of five years, and had an estimated salvage value of $7,900. Golden Manufacturing earned $89,480 and $64,990 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required a. Record the above transactions in a horizontal statements model. b-1. Prepare income statements for Year 1 and Year 2. b-2. Prepare balance sheets for Year 1 and Year 2. b-3. Prepare statements of cash flows for Year 1 and Year 2.

Golden Manufacturing Company started operations by acquiring $89,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $79,000 cash, had an expected useful life of five years, and had an estimated salvage value of $7,900. Golden Manufacturing earned $89,480 and $64,990 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required a. Record the above transactions in a horizontal statements model. b-1. Prepare income statements for Year 1 and Year 2. b-2. Prepare balance sheets for Year 1 and Year 2. b-3. Prepare statements of cash flows for Year 1 and Year 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $52,000. It is expected to have a five-year life and a $7,000 salvage value. Required a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (2) Double-declining-balance depreciation. b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double- declining-balance methods in a financial statements model. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Compute the depreciation for each of the five years, assuming that the company uses straight-line depreciation.
The XYZ Corporation is investing in a $100,000 piece of machinery with 5-year useful life and $20,000 residual value. a) Using the straight-line method, how much depreciation occurs in year 1? b) Using the double-declining method, how much depreciation occurs in year 1?
Loban Company purchased, on January 1 for cash, four cars for $9,000 each and expects that they will be sold in 3 years for $1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first year’s depreciation expense. 2. If one of the cars is sold at the beginning of the second year for $7,000, what journal entry is required?
Gates Inc., a calendar year firm, currently uses a plant asset in operations that originally cost $110,000 and has a useful life of eight years and a $10,000 residual value. Gates uses the straight line depreciation method. As an impairment indicator was present, Gates reviewed the asset for impairment. At January 1 of the current year, which is the beginning of the asset's third year of useful life, total remaining cash inflows attributable to the asset are estimated to be $120,000, while total cash outflows in running and maintaining the machine are estimated to be $65,000, Based on quoted prices and the condition of the asset, Gates estimates the fair value of the asset to be $40.000. The cost to sell the asset is approximately $5,000. Gates plans to continue to use the asset in production, although at a much lower rate of utilization. Required a. Record the impairment loss on January 1 of the current year, Date Jan 1 Account Name Date Dec 31 To record met Dr. b. Record depreciation…
Torge Company bought a machine for $66,800 cash. The estimated useful life was five years, and the estimated residual value was $5,600. Assume that the estimated useful life in productive units is 153,000. Units actually produced were 40,600 in year 1 and 45,900 in year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. Method of Depreciation Straight-line Units-of-production Double-declining-balance Depreciation Expense for Year 1 Year 2 Book Value at the End of Year 11 Year 2
Al Jafar Jewel Co. purchased a crystal extraction machine for $50,000 that has an estimated salvage value of $10,000 at the end of its 8-year useful life. Compute the depreciation schedule using: (a) Straight-line depreciation (b) Double declining balance depreciation (c) 100% bonus depreciation (d) MACRS depreciation
On January 1, Year 1, Parker Company purchased an asset costing $20,000. The asset had an expected five-year life and a $2,000 salvage value. The company uses the straight-line method. What are the amounts of depreciation expense and accumulated depreciation, respectively, that will be reported in the Year 2 financial statements? Multiple Choice $3,600 and $7,200 $4,000 and $7,200 $3,600 and $3,600 $4,000 and $12,800
Kingbird Company purchased a truck for $70,300. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of $6,300 at the end of that time. During the second year, the truck was driven 29,000 miles.Compute the depreciation for the second year under each of the methods below. Units-of-activity $enter a dollar amount Double-declining-balance $enter a dollar amount
On January 1, 20X1, Bixby Inc. purchased equipment costing $75,000. The equipment is estimated to have a residual value of $6,000 and a four-year useful life. Part A: In the following chart, compare how much depreciation expense should be recorded each year of the asset’s life and over all four years if the company uses the straight-line versus the double-declining balance depreciation (DDB) method. Part B: Prepare the entry on 12/31/X2 to record depreciation expense for 20X2, assuming the straight-line depreciation method is used. Year Straight-Line Method DBB Method Year 1 of asset's life Year 2 of asset's life Year 3 of asset's life Year 4 of asset's life Total
NOS Corp. purchased equipment for $180,000. They sold the equipment at the end of three years for $147,000. If the expected useful life of the equipment was ten years with a residual value of $30,000, and they use straight-line depreciation, which of the following is true regarding the journal entry to record the sale of the equipment? Select one: a. Credit Gain on Sale for $23,000 b. Credit Gain on Sale for $6,000 c. Credit Gain on Sale for $9,000 d. Credit Gain on Sale for $3,000 e. Credit Gain on Sale for $12,000
A company used straight-line depreciation for an item of equipment that cost $16,950, had a salvage value of $4, 200 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,695 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:$3, 780. $6.485$1,275$4,200.$2,960.