On December 31, 2020, before the books were closed, the management and accountants of Sweet Inc. made the following determinations about three pieces of equipment. Equipment A was purchased January 2, 2017. It originally cost $543,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2020, the decision was made to change the depreciation method from straight-line to sum-of-the-years'-digits, and the estimates relating to useful life and salvage value remained unchanged. 1. Equipment B was purchased January 3, 2016. It originally cost $187,500 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero residual value. In 2020, the decision was made to shorten the total life of this asset to 9 years and to estimate the residual value at $3,000. 2. Equipment C was purchased January 5, 2016. The asset's original cost was $161,600, and this amount was entirely expensed in 2016. This particular asset has a 10-year useful life and no residual value. The straight-line method was chosen for depreciation purposes. 3. Additional data: 1. Income in 2020 before depreciation expense amounted to $399,900. 2. Depreciation expense on assets other than A, B, and C totaled $55,500 in 2020. 3. Income in 2019 was reported at $373,000. 4. Ignore all income tax effects. 5. 99,300 shares of common stock were outstanding in 2019 and 2020.
On December 31, 2020, before the books were closed, the management and accountants of Sweet Inc. made the following determinations about three pieces of equipment. Equipment A was purchased January 2, 2017. It originally cost $543,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2020, the decision was made to change the depreciation method from straight-line to sum-of-the-years'-digits, and the estimates relating to useful life and salvage value remained unchanged. 1. Equipment B was purchased January 3, 2016. It originally cost $187,500 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero residual value. In 2020, the decision was made to shorten the total life of this asset to 9 years and to estimate the residual value at $3,000. 2. Equipment C was purchased January 5, 2016. The asset's original cost was $161,600, and this amount was entirely expensed in 2016. This particular asset has a 10-year useful life and no residual value. The straight-line method was chosen for depreciation purposes. 3. Additional data: 1. Income in 2020 before depreciation expense amounted to $399,900. 2. Depreciation expense on assets other than A, B, and C totaled $55,500 in 2020. 3. Income in 2019 was reported at $373,000. 4. Ignore all income tax effects. 5. 99,300 shares of common stock were outstanding in 2019 and 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Prepare comparative retained earnings statements for Sweet Inc. for 2019 and 2020. The company had retained earnings of
$198,400 at December 31, 2018.
SWEET INC.
Comparative Retained Earnings Statements
For the Years Ended
2020
2019
$
2$
$
$
Transcribed Image Text:On December 31, 2020, before the books were closed, the management and accountants of Sweet Inc. made the following
determinations about three pieces of equipment.
1.
Equipment A was purchased January 2, 2017. It originally cost $543,000 and, for depreciation purposes, the straight-line
method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In
2020, the decision was made to change the depreciation method from straight-line to sum-of-the-years'-digits, and the
estimates relating to useful life and salvage value remained unchanged.
Equipment B was purchased January 3, 2016. It originally cost $187,500 and, for depreciation purposes, the straight-line
method was chosen. The asset was originally expected to be useful for 15 years and have a zero residual value. In 2020, the
decision was made to shorten the total life of this asset to 9 years and to estimate the residual value at $3,000.
2.
Equipment C was purchased January 5, 2016. The asset's original cost was $161,600, and this amount was entirely expensed
in 2016. This particular asset has a 10-year useful life and no residual value. The straight-line method was chosen for
depreciation purposes.
3.
Additional data:
1.
Income in 2020 before depreciation expense amounted to $399,900.
2.
Depreciation expense on assets other than A, B, and C totaled $55,500 in 2020.
3.
Income in 2019 was reported at $373,000.
4.
Ignore all income tax effects.
5.
99,300 shares of common stock were outstanding in 2019 and 2020.
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