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If the company realizes at the start of 2021 that the remaining useful life of the 6-year-old building is 20 years, w

If the company realizes at the start of 2021 that the remaining useful life of the 6-year-old building is 20 years, w

FINANCIAL ACCOUNTING
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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If the company realizes at the start of 2021 that the remaining useful life of the 6-year-old building is 20 years, what should beits carrying amount at the end of the year? (Hint: The company usesthe straight-line method of depreciation.) (Round to the nearest centavos)
Tayabioities Statement of Cash Flows Financial Statement Analysis Comprehensive Problem Poco Lo, Co.'s 2020 balance sheet and 2021 common-size income statement follow: Poco Lo, Co. Balance Sheet December 31, 2020 ASSETS Cash 24 4,000 2,000 7,200 8.000 21,200 Marketable Securities Accounts Receivable Inventories Total Current Assets Land 12,000 Equipment Accumulated Depreciation - Building Accumulated Depreciation - Total Noncurrent Assets Total Assets 20,000 Equipment 3,000 70,500 - 12,000 87.500 $ 108,700 Building LIABILITIES AND STOCKHOLDERS' EQUITY %24 Accounts Payable Wages Payable Taxes Payable Total Current Liabilities 7,000 1.000 1,500 9.500 30,000 39,500 Bonds Payable Total Liabilities Common Stock, $10 par Additional Paid-In Capital Retained Eamings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 30,000 19,200 20.000 69.200 $4108.700 Poco Lo, Co. Common-Size Income Statement For the Year Ended December 31, 2021 Sales (400 Units) Cost of Goods Sold 100.00% (28% Fixod) 56.25% Gross Profit 43.75% Operating Exponses Operating Income Gain on Sale of Land (40% Variable) 43.35% 0.40% 1,60% Income Before Income Tax Tax Expense (50%) Net Income 2.00% 1.00% 1.00% Additional Information for the Year 2021: Poco Lo, Co. is a merchandiser of single-priced, wooden cabinets and no other products. Based on the horizontal and trend analysis made for accounts balances as of December 1,2020, and 2021, the following overall changes were observed: Account Name Changes Increased by 12.5% Increased to 125% Decreased by 10% Decreased by 6.25% Decreased by 12.5% Cash Marketable Securities Accounts Receivable Inventories Land Equipment Accumulated Depreciation - Equipment Building Accumulated Depreciation - Building Accounts Payable Wagos Payable Taxes Payable Bonds Payable Retained Earnings Increased to 120% Increased by 1/6 No Change Increased by 1/6 Increased to 110% Increased by 5% Decreased by 2/3 No Change Decreased by 19.25% Upon inspection of the company's records, 250 common stocks were issued for cash for the year and the company did not repurchaseany of its common stock within the year. The company did not issue any new bonds nor retired any of the existing bonds during the year. Aside from the land sold, no other noncurrent assets were disposedof within the year. Pieces of equipment were purchased within the year and no other acquisition was made. Cash Dividends were doclared and paid within the year. Gross Profit for the period is equal to $30,625. Based on the foregoing facts, answer the following questions:
Transcribed Image Text:Tayabioities Statement of Cash Flows Financial Statement Analysis Comprehensive Problem Poco Lo, Co.'s 2020 balance sheet and 2021 common-size income statement follow: Poco Lo, Co. Balance Sheet December 31, 2020 ASSETS Cash 24 4,000 2,000 7,200 8.000 21,200 Marketable Securities Accounts Receivable Inventories Total Current Assets Land 12,000 Equipment Accumulated Depreciation - Building Accumulated Depreciation - Total Noncurrent Assets Total Assets 20,000 Equipment 3,000 70,500 - 12,000 87.500 $ 108,700 Building LIABILITIES AND STOCKHOLDERS' EQUITY %24 Accounts Payable Wages Payable Taxes Payable Total Current Liabilities 7,000 1.000 1,500 9.500 30,000 39,500 Bonds Payable Total Liabilities Common Stock, $10 par Additional Paid-In Capital Retained Eamings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 30,000 19,200 20.000 69.200 $4108.700 Poco Lo, Co. Common-Size Income Statement For the Year Ended December 31, 2021 Sales (400 Units) Cost of Goods Sold 100.00% (28% Fixod) 56.25% Gross Profit 43.75% Operating Exponses Operating Income Gain on Sale of Land (40% Variable) 43.35% 0.40% 1,60% Income Before Income Tax Tax Expense (50%) Net Income 2.00% 1.00% 1.00% Additional Information for the Year 2021: Poco Lo, Co. is a merchandiser of single-priced, wooden cabinets and no other products. Based on the horizontal and trend analysis made for accounts balances as of December 1,2020, and 2021, the following overall changes were observed: Account Name Changes Increased by 12.5% Increased to 125% Decreased by 10% Decreased by 6.25% Decreased by 12.5% Cash Marketable Securities Accounts Receivable Inventories Land Equipment Accumulated Depreciation - Equipment Building Accumulated Depreciation - Building Accounts Payable Wagos Payable Taxes Payable Bonds Payable Retained Earnings Increased to 120% Increased by 1/6 No Change Increased by 1/6 Increased to 110% Increased by 5% Decreased by 2/3 No Change Decreased by 19.25% Upon inspection of the company's records, 250 common stocks were issued for cash for the year and the company did not repurchaseany of its common stock within the year. The company did not issue any new bonds nor retired any of the existing bonds during the year. Aside from the land sold, no other noncurrent assets were disposedof within the year. Pieces of equipment were purchased within the year and no other acquisition was made. Cash Dividends were doclared and paid within the year. Gross Profit for the period is equal to $30,625. Based on the foregoing facts, answer the following questions:
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