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mpany spent the following amounts on the truck: soline for the year, $8,400. 'ear 3 depreciation expense. Truck and its related Accumulated Depreciation a

mpany spent the following amounts on the truck: soline for the year, $8,400. 'ear 3 depreciation expense. Truck and its related Accumulated Depreciation a

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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} Cowboy Ice Cream Company (CIC) owned a food truck that was purchased at the beginning of Year 1 for $41,000. It had an estimated life of three years and an estimated salvage value of $2,000. CIC uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. 6:26 In Year 3, Tower Company spent the following amounts on the truck: Jan.31 Purchased gasoline for the year, $8,400. Dec.31 Recognized Year 3 depreciation expense. CIC reports the Food Truck and its related Accumulated Depreciation as one net account on their balance sheet. Record any A/D as a decrease to the Food Truck & A/D account. Required a. Record the Year 3 transactions related to the food truck in the horizontal statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or net change in cash (NC); leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) Date Balance 1/31 12/31 Total Assets Cash + 29,000+ (8,400)+ + 20,600 + Balance Sheet Food Truck & Accum Depr 15,000 8,400 COWBOY ICE CREAM COMPANY Horizontal Statements Model for Year 3 23,400 = Stockholders' Equity Common Stock 12,000+ 12,000+ Retained. Earnings 32,000 (8,400) 23,600 Revenue Income Statement. # 0- Expense = Net Income 0 = " 0 Statement of Cash Flow 0
Transcribed Image Text:} Cowboy Ice Cream Company (CIC) owned a food truck that was purchased at the beginning of Year 1 for $41,000. It had an estimated life of three years and an estimated salvage value of $2,000. CIC uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. 6:26 In Year 3, Tower Company spent the following amounts on the truck: Jan.31 Purchased gasoline for the year, $8,400. Dec.31 Recognized Year 3 depreciation expense. CIC reports the Food Truck and its related Accumulated Depreciation as one net account on their balance sheet. Record any A/D as a decrease to the Food Truck & A/D account. Required a. Record the Year 3 transactions related to the food truck in the horizontal statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or net change in cash (NC); leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) Date Balance 1/31 12/31 Total Assets Cash + 29,000+ (8,400)+ + 20,600 + Balance Sheet Food Truck & Accum Depr 15,000 8,400 COWBOY ICE CREAM COMPANY Horizontal Statements Model for Year 3 23,400 = Stockholders' Equity Common Stock 12,000+ 12,000+ Retained. Earnings 32,000 (8,400) 23,600 Revenue Income Statement. # 0- Expense = Net Income 0 = " 0 Statement of Cash Flow 0
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