Prepare an income statement for the month of June and a balance sheet in account format for Safety Hire as at 30 June 2019.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Financial data for Safety Hire as of 30 June 2019 are:
|
|
$63000 |
|
Equipment hire Income |
$170000 |
|
Accounts payable |
$40000 |
|
Michael Donato, capital |
? |
|
Cash at bank |
$45000 |
|
Mortgage payable |
$130000 |
|
Buildings |
$85000 |
|
Wages expenses |
$75000 |
|
Advertising expenses |
$30000 |
|
land |
$75000 |
|
Hire equipment |
$180000 |
|
Loan payable |
$50000 |
|
Electricity expense |
$18000 |
|
Telephone expense |
$7500 |
Required:
Prepare an income statement for the month of June and a
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