the following events toook place at pete\'s painting company during 2010. (a) On
ID: 2443077 • Letter: T
Question
the following events toook place at pete's painting company during 2010.(a) On January 1, Pete bought a used a used turck for $14,000. He added a tool chest and side racks for ladders for $4,800. The truck is expectedc to last four years and then be sold for $800. Pete uses straight line depreciation.
(b) On January 1, he purchase severla items at an auction for $2,400. the items had fair market values as follows:
10 cases of paint trays and roller covers $200
Storage cabinets 600
Ladders and scaffolding 2,400
pete will use all of the paaint trays and roller covers this year. the storage cabinets are expected to last nine years. the ladders and scafflolding ,four years.
(c) ON February 1, pete paid the city $1500 for a three year liecense to operate the business.
Explanation / Answer
the following events toook place at pete's painting company during 2010. (a) On January 1, Pete bought a used a used turck for $14,000. He added a tool chest and side racks for ladders for $4,800. The truck is expectedc to last four years and then be sold for $800. Pete uses straight line depreciation. Cost of Truck = 18,800 Depreciation of truck 4,500 per year (b) On January 1, he purchase severla items at an auction for $2,400. the items had fair market values as follows: 10 cases of paint trays and roller covers $200 Storage cabinets 600 Ladders and scaffolding 2,400 pete will use all of the paaint trays and roller covers this year. the storage cabinets are expected to last nine years. the ladders and scafflolding ,four years. Cost of items will be 10 cases of paint trays and roller covers $160 ( to be debited in Income statement) Storage cabinets 480 (To be shown in Balance sheet and Deperciation per year 53.33) Ladders and scaffolding 1,920 ( To be shown in Balance sheet and Deperciation per year 480) (c) ON February 1, pete paid the city $1500 for a three year liecense to operate the business. This will be shown as prepaid expense and will be amortised on per moth basis.
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