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
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 |
|
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. Net Sales is:
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