Straight Line Depreciation Scenarios
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During the year of 2014, Johnson And Lincoln Enterprises, Inc. reported the following Income and Expenses (including necessary accruals) for Financial Accounting purposes:
Gross Receipts $1,482,000
Sales Returns And Allowances 109,000
Purchases 510,000
Dividends Received From Stock (Not Qualified Dividends)
Investments In Less Than twenty percent (20%)
Owned United States (U. S.) Corporation 80,000
Interest Income:
Taxable Interest 18,000
Tax-Exempt Interest 7,200
Salaries: Officers 150,000
Other Employees 108,000
Repairs And Maintenance 19,300
Rent Expense - Office 84,000
Rent Expense - Equipment 15,500
Payroll Taxes (Federal And State) 19,600
Interest Expense 25,200
Advertising Expense 44,500
Charitable Contributions 48,000
Legal And Professional Fees 28,800
Depreciation Expense 50,000 *
Utilities Expense 27,300
Employee's Health Insurance Premiums 14,200
Entertainment Of Clients 5,000
Officers' Life Insurance Premiums 14,400 **
-1-
* - Based upon Straight-Line Depreciation, a useful life of five (5) years and no salvage value for all assets (see specific assets below).
** - Johnson And Lincoln Enterprises, Inc. Is The Designated Beneficiary.
The Johnson And Lincoln Enterprises, Inc. owns the following depreciable assets:
ASSET DESCRIPTION DATE ACQUIRED ORIGINAL COST
Automobile - 2013 Mercedes April 1, 2013 $ 50,000
(Five-year Property)
Automobile - 2013 Cadillac Sedan April 1, 2013 50,000
(Five-year Property)
Furniture And Fixtures May 1, 2012 150,000
(Seven-year Property).
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Solution Summary
This solution provides step-by-step calculations and justifications to conduct three straight line depreciation scenarios.
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Straight Line Depreciation
During the year of 2014, Johnson And Lincoln Enterprises, Inc. reported the following Income and Expenses (including necessary accruals) for Financial Accounting purposes:
Gross Receipts $1,482,000
Sales Returns And Allowances 109,000
Purchases 510,000
Dividends Received From Stock (Not Qualified Dividends)
Investments In Less Than twenty percent (20%)
Owned United States (U. S.) Corporation 80,000
Interest Income:
Taxable Interest 18,000
Tax-Exempt Interest 7,200
Salaries: Officers 150,000
Other Employees 108,000
Repairs And Maintenance 19,300
Rent Expense - Office 84,000
Rent Expense - Equipment 15,500
Payroll Taxes (Federal And State) 19,600
Interest Expense 25,200
Advertising Expense 44,500
Charitable Contributions 48,000
Legal And ...
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