Bill’s Lawn Care Mini Practice Part 5 In June, Bill made several purchases to ac
ID: 2498236 • Letter: B
Question
Bill’s Lawn Care Mini Practice Part 5
In June, Bill made several purchases to accommodate his growing business.
June 2 Purchased a storage location for lawn care equipment, paid $45,000 for a building on 1 acre. The land is appraised at $8,000. The building has an estimated life of 10 years with a $5,000 salvage value. Bill paid $2,000 down and financed the remaining purchase price with a 5% 5 year note.
4 Purchased a trailer to haul lawn care equipment for $2,300, estimated life is 5 years with no salvage value. Bill paid for the purchase in cash.
5 Purchased a gas powered trimmer for $1,200 and a commercial leaf-blower for $1,500. Bill estimates they will each have a two year life and no salvage value. Bill paid for both of these pieces of equipment on account.
These are in addition to the three assets Bill acquired in May:
Date Item Cost Estimated Life Salvage Value
May 2 Truck $5,000 5 years $500
5 Lawn Mower 300 2 years $0
5 Aerator 500 2 years $0
Depreciation was recorded in May for these assets using the straight-line method however Bill is considering other depreciation methods and has asked you to prepare a comparison of the straight-line method with the double declining balance (200% DDB) method before he decides.
Instructions:
Using the chart of accounts provided below and the Excel template provided with this assignment, record the transactions for the new assets purchased in June, 2014. Start with Page 7 for the journal entries. Explanations are optional.
Prepare a monthly schedule of depreciation for each of the seven assets for 2014 using 1) straight-line and 2) 200% DDB. (Assume assets purchased before the 15th of the month will be depreciated as if owned for the entire month). Remember that you are calculating monthly depreciation, not annual and adjust your depreciation rate. Carry your depreciation rate to four decimals and round the depreciation expense to two decimals.
Bill has decided that equipment will be depreciated using straight-line and the building using 200% DDB. Prepare the adjusting journal entries for depreciation for the month of June, 2014. Start with Page 8 for the adjusting journal entries. Explanations are optional.
I have already completed the journal entries, I Prepare a monthly schedule of depreciation for each of the seven assets for 2014 using 1) straight-line and 2) 200% DDB.
I need to compute...... (for all seven assets)
Asset Information: Lawn Mower, $300 cost, 2 year life, $0 salvage value Computation MonthlyDepreciation
Expense End of Year Month Depreciable
Cost Depreciation
Rate = Accumulated
Depreciation Book
Value May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14
Explanation / Answer
Depreciation schedule for Truck:
Straight line method:
Double declining balance method:
Depreciation schedule for Lawn mowerr under strainght line as well as double declining balance method:
Straight line method:
Double declining balance method:
Aerator:
Straight line method:
Double declining method:
Depreciation schedule for Building:
Double declining balance method:
Asset Information: Truck, $5000 cost, 5 year life, $500 salvage value Computation :Straight line Monthly End of Year Depreciation Month Depreciable Depreciation 18% Expense Accumulated Book Cost =$5000 Rate =( 1/ number of years of useful life) 1.5000% Depreciation Value 14-May 75 75 4925 14-Jun 75 150 4850 14-Jul 75 225 4775 14-Aug 75 300 4700 14-Sep 75 375 4625 14-Oct 75 450 4550 14-Nov 75 525 4475 14-Dec 75 600 4400Related Questions
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