The following information relates to Automative Services on 30 June 2021. Vehicles 135,000 160,000 72,000 97,500 13,500 33,750 13,500 13,200 6,000 6,500 12,500 2,750 11,100 9,750 Service Revenue Wages Expenses Cash at Bank Prepaid Insurance Wages Payable Depreciation expense Vehicles Accounts receivable Supplies Expense Supplies Unearned revenue Drawings Electricity Expense Accounts payable Capital Loan payable (due in 2021) Loan payable (due in 2025) Land Accumulated Depreciation- Vehicles 25,000 17,500 250,000 60,000
The following information relates to Automative Services on 30 June 2021. Vehicles 135,000 160,000 72,000 97,500 13,500 33,750 13,500 13,200 6,000 6,500 12,500 2,750 11,100 9,750 Service Revenue Wages Expenses Cash at Bank Prepaid Insurance Wages Payable Depreciation expense Vehicles Accounts receivable Supplies Expense Supplies Unearned revenue Drawings Electricity Expense Accounts payable Capital Loan payable (due in 2021) Loan payable (due in 2025) Land Accumulated Depreciation- Vehicles 25,000 17,500 250,000 60,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:The following information relates to Automative Services on 30 June 2021.
Vehicles
Service Revenue
Wages Expenses
Cash at Bank
Prepaid Insurance
Wages Payable
Depreciation expense Vehicles
Accounts receivable
Supplies Expense
Supplies
Unearned revenue
135,000
160,000
72,000
97,500
13,500
33,750
13,500
13,200
6,000
6,500
12,500
2,750
11,100
9,750
Drawings
Electricity Expense
Accounts payable
Capital
Loan payable (due in 2021)
Loan payable (due in 2025)
Land
Accumulated Depreciation- Vehicles
Required: Prepare a fully classified Balance Sheet in narrative format for the financial year.
25,000
17,500
250,000
60,000
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