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    Calculating cost of truck purchase, depreciation expense

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    HeFlin Company incurs these expenditures in purchasing a truck: cash price $18,100; accident insurance (during use) $2,210; sales taxes $1,730; motor vehicle license $220; and painting and lettering $1,170.
    What is the cost of the truck? $
    Apex Chemicals Company acquires a delivery truck at a cost of $26,600 on January 1, 2007. The truck is expected to have a salvage value of $3,800 at the end of its 5-year useful life. Compute annual depreciation for the first and second years using the straight-line method. (Round your answers to 0 decimal places.)
    First year depreciation $
    second year depreciation $
    On January 1, 2007, the Ewing Company ledger shows Equipment $32,000 and Accumulated Depreciation $14,000. The depreciation resulted from using the straight line method with a useful life of 10 years and a salvage value of $2,000. On this date the company concludes that the equipment has a remaining useful life of only 2 years with the same salvage value. Compute the revised annual depreciation

    Prepare journal entries to record these transactions: (For multiple debit/credit entries, list in order of magnitude.)
    (a) Blaska Company retires its delivery equipment, which cost $41,000. Accumulated depreciation is also $41,000 on this delivery equipment. No salvage value is received.
    Account / Description Debit Credit

    (b) Assume the same information as in part (a), except that accumulated depreciation for Blaska Company is $36,800 instead of $41,000.
    Account / Description Debit Credit

    Jazz Company purchases a patent for $176,800 on January 2, 2007. Its estimated useful life is 7 years.
    (a) Prepare the journal entry to record amortization expense for the first year. (Round your answers to 0 decimal places.)
    Date Account / Description Debit Credit
    Jan. 2
    $

    $

    (b) Show how this patent is reported on the balance sheet at the end of the first year.
    Intangible Assets:
    Patent $

    In its 2004 annual report, McDonald's Corporation reports beginning total assets of $25.5 billion; ending total assets of $27.8 billion; net sales of $19.1 billion, and net income of $2.3 billion. (Round your answers to 2 decimal places.)
    (a) Compute McDonald's return on assets ratio. %
    (b) Compute McDonald's asset turnover ratio. times

    P9-2

    At December 31, 2007, Ruiz Corporation reported the following plant assets.
    Debits
    Land $3,000,000
    Buildings $26,500,000
    Less: Accumulated depreciation - buildings 12,100,000 14,400,000
    Equipment 40,000,000
    Less: Accumulated depreciation - equipment 5,000,000 35,000,000
    Total plant assets $52,400,000
    During 2008, the following selected cash transactions occurred.

    Apr. 1 Purchased land for $2,200,000.
    May 1 Sold equipment that cost $660,000 when purchased on January 1, 2001. The equipment was sold for $200,000.
    June 1 Sold land for $1,800,000. The land cost $700,000.
    July 1 Purchased equipment for $1,300,000.
    Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 1998. No salvage value was received.

    Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2008 transactions.) Ruiz uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (For multiple debit/credit entries, list in order of magnitude.)
    Date Account / Description Debit Credit
    Apr. 1
    $

    $

    May 1
    $

    $

    (To record depreciation on asset sold.)
    May 1

    (To record sale of equipment.)
    June 1
    $

    $

    $

    July 1
    $

    $

    Dec. 31
    $

    $

    (To record depreciation on equipment.)
    Dec. 31
    $

    $

    (To record retirement of equipment.)

    Record adjusting entries for depreciation for 2008.
    Date Account / Description Debit Credit
    Dec. 31
    $

    $

    (To record depreciation on buildings.)
    Dec. 31
    $

    $

    (To record depreciation on equipment.)
    Complete the plant assets section of Ruiz's balance sheet at December 31, 2008.
    RUIZ CORPORATION
    Balance Sheet (Partial)
    12/31/08
    Land $

    Buildings $

    Less: Accumulated depreciation - buildings

    Equipment

    Less: Accumulated depreciation - equipment

    Total plant assets $

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    https://brainmass.com/business/the-adjusting-process/125310

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    Solution Preview

    HeFlin Company incurs these expenditures in purchasing a truck: cash price $18,100; accident insurance (during use) $2,210; sales taxes $1,730; motor vehicle license $220; and painting and lettering $1,170.
    What is the cost of the truck? $ 18,100 + 1,730 + 220 + 1,170 = 21,220
    Apex Chemicals Company acquires a delivery truck at a cost of $26,600 on January 1, 2007. The truck is expected to have a salvage value of $3,800 at the end of its 5-year useful life. Compute annual depreciation for the first and second years using the straight-line method. (Round your answers to 0 decimal places.)
    Straight line depreciation method = (Total cost - Salvage value)/Useful life
    = (26,000 - 3,800)/5
    Depreciation expense per year = 4,440
    First year depreciation $ 4,440
    second year depreciation $ 4,440
    On January 1, 2007, the Ewing Company ledger shows Equipment $32,000 and Accumulated Depreciation $14,000. The depreciation resulted from using the straight line method with a useful life of 10 years and a salvage value of $2,000. On this date the company concludes that the equipment has a remaining useful life of only 2 years with the same salvage value. Compute the revised annual depreciation

    Remaining balance of the Equipment = Total Cost - Accumulated Depreciation
    = 32,000 - 14,000
    = 18,000
    Straight line depreciation method = (Total cost - Salvage value)/Useful life
    = (18,000 - 2,000)2
    Depreciation expense per year = 8,000
    Prepare journal entries to record these transactions: (For multiple debit/credit entries, list in order of magnitude.)
    (a) Blaska Company retires its delivery equipment, which cost $41,000. Accumulated depreciation is also $41,000 on this delivery equipment. No salvage value is received
    Accumulated depreciation 41,000
    Equipment 41,000
    Account / Description Debit Credit

    $

    $

    (b) Assume the same information as in part (a), except that accumulated depreciation for Blaska Company is $36,800 instead of $41,000.
    Accumulated depreciation 36,800
    Loss from Disposal 4,200
    Equipment 41,000
    Account / Description Debit Credit

    $

    $

    $ ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate cost of truck purchase, calculate depreciation expenses, and prepare journal entries and adjusting entries.

    $2.19

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