On December 31, Year 4, Alexa Company is preparing adjusting entries for its annual year-end. The following issues confront the company. 1. Equipment # 101 with a cost of $12,320 was purchased three years earlier on January 1, Year 2. It is being depreciated on a straight-line basis over an estimated useful life of 10 years with no residual value. At December 31, Year 4, it has been determined that the estimated total useful life is 6 years instead of 10. 2. Equipment #502 with a cost of $7,280 was purchased four years earlier on January 1, Year 1. It is being depreciated on a straight-line basis over an estimated useful life of seven years with no residual value. At December 31, Year 4, it was discovered that no depreciation had been recorded on this equipment for Year 1 or Year 2, but it was recorded for Year 3. 3. In Year 4, Alexa decided to change inventory methods from the weighted-average method to the FIFO method. Net income reported in Year 3 applying the weighted-average method was $152,000. If FIFO had been applied in Year 3, net income would have been $161,600. a. For equipment # 101, provide the required adjusting entry for depreciation expense at December 31, Year 4. Note: Round answers to the nearest whole dollar. Date Dec. 31, Year 4 Depreciation Expense Date Dec. 31, Year 4 Account Name Date Dec. 31, Year 4 Accumulated Depreciation To record deprecalation. $0 b. For equipment #502, provide the required adjusting entry for depreciation expense at December 31, Year 4. x Account Name V v Account Name To record correcting.entry. V V Dr. 1,232 0 V V Dr. To record deprecalation. c. For equipment #502, provide any necessary correcting entry. Ignore income taxes. 0 0 Dr. Cr. 0 0 0x 1,232 x Cr. Cr. 0x 0x d. In reporting comparative income statements in Year 4, what net income amount is presented for Year 3? 0x 0x
On December 31, Year 4, Alexa Company is preparing adjusting entries for its annual year-end. The following issues confront the company. 1. Equipment # 101 with a cost of $12,320 was purchased three years earlier on January 1, Year 2. It is being depreciated on a straight-line basis over an estimated useful life of 10 years with no residual value. At December 31, Year 4, it has been determined that the estimated total useful life is 6 years instead of 10. 2. Equipment #502 with a cost of $7,280 was purchased four years earlier on January 1, Year 1. It is being depreciated on a straight-line basis over an estimated useful life of seven years with no residual value. At December 31, Year 4, it was discovered that no depreciation had been recorded on this equipment for Year 1 or Year 2, but it was recorded for Year 3. 3. In Year 4, Alexa decided to change inventory methods from the weighted-average method to the FIFO method. Net income reported in Year 3 applying the weighted-average method was $152,000. If FIFO had been applied in Year 3, net income would have been $161,600. a. For equipment # 101, provide the required adjusting entry for depreciation expense at December 31, Year 4. Note: Round answers to the nearest whole dollar. Date Dec. 31, Year 4 Depreciation Expense Date Dec. 31, Year 4 Account Name Date Dec. 31, Year 4 Accumulated Depreciation To record deprecalation. $0 b. For equipment #502, provide the required adjusting entry for depreciation expense at December 31, Year 4. x Account Name V v Account Name To record correcting.entry. V V Dr. 1,232 0 V V Dr. To record deprecalation. c. For equipment #502, provide any necessary correcting entry. Ignore income taxes. 0 0 Dr. Cr. 0 0 0x 1,232 x Cr. Cr. 0x 0x d. In reporting comparative income statements in Year 4, what net income amount is presented for Year 3? 0x 0x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, Year 4, Alexa Company is preparing adjusting entries for its annual year-end. The following issues confront the company.
1. Equipment #101 with a cost of $12,320 was purchased three years earlier on January 1, Year 2. It is being depreciated on a straight-line basis over an estimated useful life of 10 years with no residual value. At December 31, Year 4, it has been determined that the estimated total
useful life is 6 years instead of 10.
2. Equipment #502 with a cost of $7,280 was purchased four years earlier on January 1, Year 1. It is being depreciated on a straight-line basis over an estimated useful life of seven years with no residual value. At December 31, Year 4, it was discovered that no depreciation had been
recorded on this equipment for Year 1 or Year 2, but it was recorded for Year 3.
3. In Year 4, Alexa decided to change inventory methods from the weighted-average method to the FIFO method. Net income reported in Year 3 applying the weighted-average method was $152,000. If FIFO had been applied in Year 3, net income would have been $161,600.
a. For equipment #101, provide the required adjusting entry for depreciation expense at December 31, Year 4.
• Note: Round answers to the nearest whole dollar.
Date
Dec. 31, Year 4 De eciation Expense
Date
Dec. 31, Year 4
Account Name
Date
Dec. 31, Year 4
Accumulated Depreciation
To record deprecaiation.
$0
b. For equipment #502, provide the required adjusting entry for depreciation expense at December 31, Year 4.
X
Account Name
To record deprecaiation.
Dr.
Account Name
1,232
0
To record correcting entry.
Dr.
c. For equipment #502, provide any necessary correcting entry. Ignore income taxes.
0
0
Dr.
Cr.
0
0
Cr.
0 x
1,232 x
Cr.
0 x
0x
d. In reporting comparative income statements in Year 4, what net income amount is presented for Year 3?
0 x
0 x
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