The accountant for Get Your Motor Runnin\' is preparing the 3rd quarter financia
ID: 2456688 • Letter: T
Question
The accountant for Get Your Motor Runnin' is preparing the 3rd quarter financial statements and has asked for your help in preparing the adjusting entries for depreciation of the company's fixed assets.
1. The equipment purchased on March 1 is expected to have a useful life of 5 years and a salvage value of $10,000.
2. The equipment purchased on Aug 5 is expected to have a useful life of 5 years and a salvage value of $3,750.
3. The truck and trailer purchased on Aug 5 are expected to have a useful life of 5 years or 100,000 miles and a salvage value of $5,000. During the 3rd quarter, 2,000 miles were put on the truck/trailer.
4. The building purchased on Aug 1 is expected to have a useful life of 20 years and a salvage balue of $84,375.
5. The parking lot purchased on Aug 1 is expected to have a useful life of 10 years and a salvage value of $750.
GENERAL LEDGER Account: EQUIPMENT Account Number: 150 Date Explanation Post. Ref. Debit Credit Balance 1-Mar J1 $50,000 $50,000 5-Aug J5 $15,000 $65,000 GENERAL LEDGER Account: Building Account Number: 160 Date Explanation Post. Ref. Debit Credit Balance 1-Aug J5 $684,375 $684,375Explanation / Answer
March 1 depreciation on equipment = ($50,000- 10,000)/5 = 8000 per annum
depreciation for three years = $8,000/ 12 *10 = $6667
August 5 equipmetn = (15,000- $3750)/5 +148/365 = $912
3) truck trailer (35,000- 5000)/100,000 * 2000 = $600
$) Building ( $684,375 - $4375) /20 = $30,000
$30,000*5/12 = $12,500 dep
5) Parking lot = (18750 - 750) /10 *5/12 = $750
Entry for depreciation will be
Depreciation - building $ 12,500
to accumulated dep $12,500
Depreciation - parking lot $ 750
to accumulated dep $750
Deprecaiton on equioment $7579 To Accumulated depreciation $7579 Depreciation - trialer $600 To Accumulated dep $600Related Questions
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