Question 1: On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase. Instructions: - Compute the cost price of the machine and give the journal entry to record the acquisition of machine. Use all the following three methods to prepare the depreciation schedule Straight Line Method Sum-of-the-Year-Digit Method Give the adjusting entries to record depreciation and prepare the financial statement extracts as following: Straight Line Method for the years 2009 and 2010, and Sum-of-the-Year-Digit Method for the years 2012 and 2013

Question 1: On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase. Instructions: - Compute the cost price of the machine and give the journal entry to record the acquisition of machine. Use all the following three methods to prepare the depreciation schedule Straight Line Method Sum-of-the-Year-Digit Method Give the adjusting entries to record depreciation and prepare the financial statement extracts as following: Straight Line Method for the years 2009 and 2010, and Sum-of-the-Year-Digit Method for the years 2012 and 2013

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...

See similar textbooks

Related questions

Q: On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30.…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…

Q: Instructions: Answer the following questions. Provide all your computations. Company ARL provides…

A: ANSWER Revaluation of Assets means a change in the market value of assets whether it is increasing…

Q: On August, 2019, HBO consigned to GEO 10 laptops costing $15,000 each, paying freight charge of…

A: Consignment Account: It is made to calculate the profit earned or loss incurred by the consignor…

Q: STL service and installation works purchased a diesel generator from the ABB Electric Company…

A: This question pertains to monthly amortization of a loan. We need to find the monthly payment that…

Q: OnJanuary 3,2020,GagneInc. paid $320,000 for a computer system. In addition to the basic purchase…

A: Depreciation refers to the accounting concept which results in decrease in the value of the asset…

Q: Required information A potential investment has a cost of $350,000 and a useful life of 6 years.…

A: The time value of money computes the present value and future of the investment. The present value…

Q: QUIZ 2: 1. On January 1, 20x1 Buckle Co. purchased a machine that had a list price of P46,320.…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Jisoo Company purchased an equipment with a list price of 1,500,000 with the following terms:trade…

A: Present value of estimated dismantling cost = P 70,000 x 1 / (1.10 )5 = P70,000 x 0.621 = P 43,470…

Q: A machine can be purchased for $80,000 and used for five years, yielding the following Income. This…

A: Step 1:The calculation for the payback period is given below: -Payback Period=Last Year With…

Q: BLITZKRIEG Co. purchases goods for P250,000 under a special credit period of 1 year. The seller…

A: Accounting is done on the historical cost concept, which states that transactions are recorded at a…

Q: A computer purchased for $1200 will have a salvage value of $600 after 6 years. Annual maintenance…

A: Correct answer is option (b). $298

Q: Manila Company purchased equipment on January 1, 2012 under the following terms: a. P200, 000…

A: The fixed assets are recorded at the cost which is paid to acquire it by the business.

Q: Assume a vat of 15 % One way trader is a registered vat vendor and the financial year end is 31…

A: Depreciation represents the reduction in the value of a capital asset over a period of time.

Q: A car can be purchased for P650,000 when new. There follows a schedule of annual operating expenses…

A: Operating expenses are those expenses which are incurred for the purpose of operating an asset.…

Q: YEAR 1 YEAR 2 YEAR 3 Operating expenses for year P36.00 P40.00 P43.00 Trade in value at the end of…

A: The initial cost of a vehicle is the cost of acquisition which includes cost of purchase and other…

Q: Current Attempt in Progress Crane Company signs a contract to sell the use of its patented…

A: The trade name is an intangible asset for the business, It's reported in the assets section of the…

Q: 1. A commercial company plans to buy the device for $ 20,000 and is expected to sell it for $ 8,000…

A: Under this method, yearly depreciation rate is calculated by dividing remaining useful life to sum…

Q: TOPIC: ANNUITIES INSTRUCTION: SHOW COMPLETE SOLUTION WITH CORRESPONDING CASH FLOW DIAGRAM AND BOX…

A: Interest Rate = 7% Payments as per contract: Year Payment 0 600000.00 1 2 3 4…

Q: Required information [The following information applies to the questions displayed below.] On…

A: The straight-line method of depreciation records an equal amount of depreciation expense for each…

Q: Crane Company buys a delivery van with a list price of $55000. The dealer grants a 12% reduction in…

A: Solution: Cost of the assets are recorded at the purchase price net of any discounts and also…

Q: What should be the journal entry to record the disposal of the equipment?

A: As per IAS 39 ( Financial Instruments - Recognition and Measurement ) Financial assets has to be…

Q: During the current year, Gardner Home Center sold 800 power washers for $350 each. The power washers…

A: Warranty Liability: Estimated liability is an exact dollar amount of debt or obligation which is…

Q: Kemp Inc. acquired a new processing machine: Invoice cost P1,800,000 Transportation cost…

A: The cost of acquisition of the asset includes the following: Net Purchase cost of the asset…

Q: LEW Company purchased a machine at a price of $100,000 by signing a note payable, which requires a…

A: The Time Value of Money is based on the principle that a dollar today is worth more than a dollar in…

Q: Speedy Delivery Company purchases a delivery van for $38,400. Speedy estimates that at the end of…

A: Under this method of charging depreciation, the depreciation is charged based on the usage during…

Q: A company bought machine on July 1, 1998 at a list price of Rs.80, 000. Trade discount availed 10%.…

A: Since you have asked multiple question, we are answering the first question. If you want other…

Q: 1. A company is considering whether to purchase a new machine. Machines A and B are available for…

A: Net present value and internal rate of return are the modern method of capital budgeting that is…

Q: Sage Hill Company purchased a machine at a price of $104, 000 by signing a note payable, which…

A: Future Value (FV) = $120,000Present Value (PV) = $138,424No. of years (NPER) = 3

Q: Rusty Corporation purchased a rust-inhibiting machine by paying $58,500 cash on the purchase date…

A: Present Value of Cash Flows represents the current worth of future cash inflows, adjusted for the…

Q: The entry to record the purchase of the machine would include a A. debit to machine for $80,000 B.…

A: Solution 1: Present value of note = $80,000 * PV factor at 3% for 6th period = $80,000 * 0.837 =…

Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Question 1: On January 02, 2009, Atlas Business bought a machine for Rs. 50, 000, on credit terms of 2/10, n/30. The payment was paid within the discount period. Freight in charges was Rs.4, 000 and installation and testing charges were Rs. 2, 000. It was estimated that the useful life will be 5 years and the residual value will be Rs. 7, 000. Full year convention was used in the year of purchase.

Instructions: -

Compute the cost price of the machine and give the journal entry to record the acquisition of machine.

Use all the following three methods to prepare the depreciation schedule

Straight Line Method
Sum-of-the-Year-Digit Method

Give the adjusting entries to record depreciation and prepare the financial statement extracts as following:

Straight Line Method for the years 2009 and 2010, and

Sum-of-the-Year-Digit Method for the years 2012 and 2013.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

I need the answer as soon as possible
ASAP!! (A) A company bought machine on July 1, 1998 at a list price of Rs.80, 000. Trade discount availed 10%. Credit term is 2.5/10, n/45. Company paid following expenses: Installation charges Rs.5000 Foundation charges Rs.12500 Trial run cost Rs. 2000 The estimated life of the machine is expected to be 6 years and expected scrap value is Rs.9500. Required: 1) Compute total cost of the machine Compute depreciation for the year 1998-2003 under following methods using schedule: Straight line method MACRS method Double declining balance method B) Walker Motel recently purchased new exercise equipment for its exercise room. The following information refers to the purchase and installation of this equipment: The list price of the equipment was $40,000; however, Walker qualified for a “special discount” of…
Question Seema Company purchased a machine on April 01, 2017 at a list price of Rs 1,000,000 with a trade discount at 10%. The credit terms were 2/10, 1/20, n/30. The payment was made on 19 April. The company incurred the following additional expenditures. | 1- 5% Sales tax on the cash price of Machine 2- Custome Duty Rs 5% of cash price 3- Installation & Testing cost Rs 200,000 | 4- The machine was insured against theft and fire and premium paid Rs 50,000 5- Insurance in transit Rs 100,000 6- Freight in Rs 50,000 7- Some parts damaged during installation and get repaired for 25,000
please help answer
Assume a vat of 15 % One way trader is a registered vat vendor and the financial year end is 31 December 2020.on 1 January 2019 new equipment was bought at cost of R6325 (vat included) the machine has useful life span of 5 years depreciation on machines is calculated on the straight line method What is the depreciation amount?
On January 2, 2020, ABC Co. purchased a machine on credit terms 2/10, n/30. The invoice price was P40,000. Additional costs incurred in connection with the machine are as follows: Transportation-in: P1,200 Installation cost: P700 Testing costs prior to regular operation: P550 If the invoice is paid February 1, the acquisition cost of the machine must be a. P41,650 b. P41,100 c. P40,400 d. P39,200 e. answer not given
c3
Subject: accounting
Revenue from the sale of ergonomic hand tools was P300,000 in years 1 through 4 and P465,000 in years 5 through 9. Determine the equivalent annual revenue in years 1 through 9 at an interest rate of 10% per year. a. P437181 O b. P473181 Oc. P347181 O d. P374181
On 2 January 2019, Johnston Ltd purchased a machine with a list price of $234 300 and credit terms of 2/10, n/30. Payment was made within the discount period. Freight costs of $5400 and installation costs of $5280 were also paid. The machine has a useful life of 4 years and a residual value at the end of its useful life of $24 000. Ignore GST. Required Determine the amount that should be debited to the machinery account and prepare a general journal entry to record the purchase, assuming a financial year ending 31 December. Determine the amount of depreciation expense for each of the 4 years ending 31 December assuming use of: the straight-line depreciation method the diminishing balance method of depreciation.
QUIZ 2: 1. On January 1, 20x1 Buckle Co. purchased a machine that had a list price of P46,320. Buckle Co. paid cash of P18,000 and executed a one-year non-interest-bearing note for the balance. The going rate of interest was 18%. The machine has a 6-year life and no residual value. Depreciation expense on the SYD basis at the end of 20x1 is: The next four items are based on the following information: Dirt Corporation schedule of depreciable assets at December 31, 20X7 was as follows: Асcum. Depreciation 64,000 36,000 33,600 Acquisition date Residual value 20,000 10,000 14,000 Asset Cost 100,000 55,000 70,000 20X6 20X5 20X5 Dirt takes a full year's depreciation expense in the year of an asset's acquisition, and no depreciation expense in the year of an asset's disposition. The estimated useful life of each depreciable asset is 5 years. 2. Dirt depreciates asset A on the double-declining-balance method. How much depreciation expense should Dirt record in 20X8 for asset A?_ 3. Dirt…
i need solution step by step