College Accounting
13th Edition
ISBN: 9781337280563
Author: Scott, Cathy J.
Publisher: Cengage Learning,
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Chapter A, Problem 2P
Use the information in Problem A-1 to solve this problem. Assume the delivery van is expected to have a useful life of 100,000 miles (Year 1, 40,000 miles; Year 2, 30,000 miles; Year 3, 20,000 miles; Year 4, 10,000 miles).
Required
Prepare a schedule of
Check Figure
Year 3 depreciation, $3,200
PROBLEM A-1 A delivery van was bought for $18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be $2,000.
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Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump follows:
Thalassines Kataskeves, S.A.
Income Statement—Bilge Pump
For the Quarter Ended March 31
Sales
$ 410,000
Variable expenses:
Variable manufacturing expenses
$ 123,000
Sales commissions
50,000
Shipping
21,000
Total variable expenses
194,000
Contribution margin
216,000
Fixed expenses:
Advertising (for the bilge pump product line)
27,000
Depreciation of equipment (no resale value)
120,000
General factory overhead
38,000*
Salary of product-line manager
113,000
Insurance on inventories
5,000
Purchasing department
49,000†
Total fixed expenses
352,000
Net operating loss
$ (136,000)
*Common costs allocated on the basis of machine-hours.
†Common costs allocated on the basis of…
Do companies maintain two sets of depreciation schedules, one for financial reporting and the other one for tax purposes?
none ??
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