### Educational Website Transcription:**Tower Company Truck Depreciation and Maintenance Transactions****Background:**Tower Company owned a service truck purchased at the beginning of Year 1 for $32,000. This truck had an estimated life of three years and a salvage value of $5,000. Tower Company employs straight-line depreciation, with its financial condition as of January 1, Year 3, detailed in the horizontal statements model.**Year 3 Expenses on the Truck:**- **January 4:** Engine overhauled for $6,100, extending its life one additional year. Salvage value revised to $4,000. - **July 6:** Oil change and transmission service – $260. - **August 7:** Fan belt and battery replaced – $360. - **December 31:** Gasoline for the year – $7,600. - **December 31:** Recognized Year 3 depreciation expense.---**Requirement:****a. Record Year 3 Transactions in a Statements Model:**- Indicate changes in the Cash Flow column as an Operating Activity (OA), Investing Activity (IA), Financing Activity (FA), or Net Change in Cash (NC).- Leave blank if Statement of Cash Flows is unaffected.- Enter decreases to balances and cash outflows with a minus sign. Not all cells require an entry.**Horizontal Statements Model for Year 3**- **Balance Sheet:** - **Assets:** Includes changes in cash and the book value (BV) of the truck. - **Stockholders' Equity:** Consists of Common Stock and Retained Earnings.- **Income Statement:** - Captures Revenue, Expense, and Net Income.- **Statement of Cash Flow:** - Tracks all cash flow activities.The detailed model tracks the balance, activities on January 4, July 6, August 7, and December 31, showing the financial effects of each transaction throughout Year 3. Balances for cash, truck book value, common stock, retained earnings, revenue, expenses, and net income are displayed, alongside their impacts on cash flows.This clear breakdown helps in understanding the financial positioning and activities related to asset management within the company.

Name: ### Educational Website Transcription:**Tower Company Truck Depreciat
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: ### Educational Website Transcription:**Tower Company Truck Depreciation and Maintenance Transactions****Background:**Tower Company owned a service truck purchased at the beginning of Year 1 for $32,000. This truck had an estimated life of three yea

The depreciation is a noncash expense, it means it does not affect cash flows. The depreciation is…

Business

Accounting

Tower Company owned a service truck that was purchased at the beginning of Year 1 for $32,000. It had an estimated life of three years and an estimated salvage value of $5,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. In Year 3, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $6,100. The estimated life was extended one additional year, and the salvage value was revised to $4,000. July 6 Obtained oil change and transmission service, $260. Aug. 7 Replaced the fan belt and battery, $360. Dec.31 Purchased gasoline for the year, $7,600. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or net change in cash (NC); leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.)

Tower Company owned a service truck that was purchased at the beginning of Year 1 for $32,000. It had an estimated life of three years and an estimated salvage value of $5,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. In Year 3, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $6,100. The estimated life was extended one additional year, and the salvage value was revised to $4,000. July 6 Obtained oil change and transmission service, $260. Aug. 7 Replaced the fan belt and battery, $360. Dec.31 Purchased gasoline for the year, $7,600. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or net change in cash (NC); leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Copy equipment was acquired at the beginning of the year at a cost of $51,850 that has an estimated residual value of $4,700 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 943,000 copies. This year, 204,000 copies were made. a. Determine the depreciable cost.$fill in the blank 1 b. Determine the depreciation rate. Round your answer to two decimal places.$fill in the blank 2 per copy c. Determine the units-of-output depreciation for the year.$fill in the blank 3
Mohr Company purchases a machine at the beginning of the year at a cost of $42,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 8 years with a $4,000 salvage value. The book value of the machine at the end of year 2 is:
Sanders LLC purchased new packaging equipment with an estimated useful life of five years. The cost of the equipment was $30,000, and the salvage value was estimated to be $3,000 at the end of five years. Compute the annual depreciation expenses through the five-year life of the equipment under each of the following methods of book depreciation:(a) The straight-line method.(b) The double-declining-balance method. (Limit the depreciation expense in the fifth year to an amount that will cause the book value of the equipment at year-end to equal the $3,000 estimated salvage value.)
On January 1, 20x0, a company purchased a delivery truck for $30,000. They estimated the useful life of the truck to be 6 years, and the salvage value to be $6,000. On July 1, 20x5, they sold the truck for $7,400. Assuming the company uses straight line depreciation and records depreciation expense monthly, calculate the gain or loss associated with selling the truck.
A truck with an estimated useful life of four years was acquired on January 1, Year 1 for $24,000. The estimated residual (salvage) value of the truck is $4,000. Compute the depreciation expense for Year 1 and Year 2. Also compute the book value of the truck at the end of Year 2. Year 1 Year 2 Year 2 Depreciation Depreciation Book Value Expense Expense (1) Straight Line Method (2) Double-Declining Balance Method ish (United States) E Focus MacBook Pro
Bailand Company purchased a building for $286,000 that had an estimated residual value of $6,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years).2. Bailand changes to the sum-of-the-years’-digits method.3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense. 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes.
On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is
A company purchased a machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of accumulated depreciation at the end of the second year? Multiple Choice $48,133. $86,133. $23,750. $81,600. $45,600.
The Black Limo Company (BLC) purchased a limo on January 1 of Year 1. The limo cost $48,000. It had an expected useful life of 4 years and a $8,000 salvage value. At the start of Year 2, BLC determined the salvage value should be changed to $11,000. Based on this, the depreciation expense recorded in Year 2 will be $
Mohr Company purchases a machine at the beginning of the year at a cost of $31,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 5 years with a $4,000 salvage value. The book value of the machine at the end of year 2 is: Multiple Choice $5,400. $10,800. $16,200. $20,200.
At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $52,000. It is expected to have a five-year life and a $7,000 salvage value. Required a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (2) Double-declining-balance depreciation. b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double- declining-balance methods in a financial statements model. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Compute the depreciation for each of the five years, assuming that the company uses straight-line depreciation.
Layton Company purchased tool sharpening equipment on October 1 for $108,000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual value of $7,200. The equipment was used for 1,350 hours during Year 1, 4,200 hours in Year 2, 3,650 hours in Year 3, and 2,800 hours in Year 4. In a table show depreciation expense, accumulated deprecation at the end of the year, beginning and ending book value (Use double declining method only) Cost Beginning Book Value Accumulated Deprecation Depreciation expense Book value at End