Use the following information to answer questions 5-20. On December 31, 2016 the following Trial Balance was extracted from the books of Jona Willis. Details/Accounts Dr Cr Capital 100,900 Acc. Prov. for Depreciation: Fixtures and Fittings Jan. 2016 3,000 Acc. Prov. for Depreciation: Motor Vehicle Jan. 2016 3,300 Accounts payable 27,000 Commission Received 3,600 Loan 12,000 Sales 41,000 Purchases 11,600 Office Expenses 12,400 Miscellaneous Expenses 740 Salary and Wages 7,800 Carriage inwards 100 Telephone Expense 240 Rent expense 2,100 Electricity Expense 1,140 Discounts allowed 160 Return Inwards 400 Stock, January 1, 2016 3,600 Accounts receivable 39,000 Cash at Bank 23,400 Drawings 8,920 Land 39,200 Fixtures and Fittings 17,000 Motor Vehicle 23,000 190,800 190,800 The following additional information has been made available: Electricity expense accrued $1000. Rent expense prepaid $800. Depreciation is to be provided for as follows: Motor Vehicle at 15% of cost; Fixtures and Fittings at 10% reducing balance method. Stock at December 31, 2016 was valued at $2,800. a. Total Gross Profit is: b. Motor Vehicle Deprecation Expense for the period is:
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.
Use the following information to answer questions 5-20.
On December 31, 2016 the following
|
Details/Accounts |
Dr |
Cr |
|
Capital |
|
100,900 |
|
Acc. Prov. for |
|
3,000 |
|
Acc. Prov. for Depreciation: Motor Vehicle Jan. 2016 |
|
3,300 |
|
Accounts payable |
|
27,000 |
|
Commission Received |
|
3,600 |
|
Loan |
|
12,000 |
|
Sales |
|
41,000 |
|
Purchases |
11,600 |
|
|
Office Expenses |
12,400 |
|
|
Miscellaneous Expenses |
740 |
|
|
Salary and Wages |
7,800 |
|
|
Carriage inwards |
100 |
|
|
Telephone Expense |
240 |
|
|
Rent expense |
2,100 |
|
|
Electricity Expense |
1,140 |
|
|
Discounts allowed |
160 |
|
|
Return Inwards |
400 |
|
|
Stock, January 1, 2016 |
3,600 |
|
|
|
39,000 |
|
|
Cash at Bank |
23,400 |
|
|
Drawings |
8,920 |
|
|
Land |
39,200 |
|
|
Fixtures and Fittings |
17,000 |
|
|
Motor Vehicle |
23,000 |
|
|
|
190,800 |
190,800 |
The following additional information has been made available:
- Electricity expense accrued $1000.
- Rent expense prepaid $800.
- Depreciation is to be provided for as follows: Motor Vehicle at 15% of cost; Fixtures and Fittings at 10%
reducing balance method . - Stock at December 31, 2016 was valued at $2,800.
a. Total Gross Profit is:
b. Motor Vehicle Deprecation Expense for the period is:
c.
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