Prepare a monthly schedule of depreciation

Assignment Help Financial Accounting
Reference no: EM131146534

Bill's Lawn Care Module 5 Mini Practice Problem

In June, Bill made several purchases to accommodate his growing business.

June 2 Bill 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.

June 4 Bill 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.

June 5 Bill 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                   $7,000         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:

1. 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.

2. 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.

3. 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.

Bill's Lawn Care

Chart of Accounts

Classification

Account Number

Account Name

ASSETS

101

Cash

 

110

Accounts Receivable

 

112

Allowance for Doubtful Accounts

 

115

Notes Receivable

 

116

Interest Receivable

 

120

Supplies

 

130

Prepaid Insurance

 

140

Inventory

 

150

Equipment

 

152

Land

 

153

Building

 

155

Accumulated Depreciation - Equipment

 

156

Accumulated Depreciation - Building

LIABILITIES

201

Accounts Payable

 

220

Notes Payable

 

225

Interest Payable

OWNER'S EQUITY

301

Owner's Capital

 

305

Owner's Drawings

 

310

Income Summary

REVENUES

401

Lawn Service Revenue

 

410

Sales Revenue

 

415

Sales Returns and Allowances

 

420

Interest Income

COST OF GOODS SOLD

501

Purchases

 

505

Purchase Returns and Allowances

EXPENSES

620

Supplies Expense

 

630

Fuel Expense

 

640

Repair and Maintenance Expense

 

650

Advertising Expense

 

660

Insurance Expense

 

670

Depreciation Expense

 

680

Interest Expense

 

690

Bad Debt Expense

 

695

Miscellaneous Expense

Reference no: EM131146534

Questions Cloud

Develop conceptual data model diagram : To develop a conceptual data model diagram and to perform logical design and Development Plan applications (here after called as application) that have been received during the previous month from the developers/ owners of the plots under the counc..
Aircraft maintenance errors result in aircraft failures : How and why does aircraft maintenance errors result in aircraft failures? As an aircraft manager, how can you better manage maintenance errors? and explain how better management can prevent aircraft failures.
Determine the equivalent cross-sectional area of the cables : The time period of axial vibration (in vertical direction) is found to vary from 5 s to 4.0825 s when an additional mass of 5,000 kg is added to the pressure-vessel head. Determine the equivalent cross-sectional area of the cables and the mass of ..
What amount did tootsie roll industries report : What amount did Tootsie Roll Industries report as "Other comprehensive earnings" in 2009?
Prepare a monthly schedule of depreciation : Prepare a monthly schedule of depreciation for each of the seven assets for 2014 using- straight-line and- 200% DDB.
Phase of developing business continuity plan : You are now in the phase of developing a business continuity plan for the same veterinary practice. Describe the basic activities that must be managed by the BCP. Develop plans for alternate site relocation, and develop an estimated monthly budget fo..
Explain the general goals of financial reporting : Address your message to your creditors and explain the general goals of financial reporting and the steps you took in the recording process. How the steps you took support the principles of accounting?
Sandran changes to the average cost method : Sandran changes to the average-cost method for all its inventory. How will Sandran report this change?
Find the diameter of the steel cables : Find the diameter of the steel cables so that the natural frequency of vibration of the crate is at least twice the frequency of the rotor blades.

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  What amount of gain each person required

start that business, what amount of gain each person is required to identify under business if formed as C, S , and LLC corporation?

  Machine and was depreciating it by the units-of-production

Machine and was depreciating it by the units-of-production method. The machine was expected to produce a total of 159,000 units of product

  Compute gibsons investment in miller companys balance

On July 1, 2011, Gibson Company acquired 75,000 of the outstanding shares of Miller Company for $12 per share. This acquisition gave Gibson a 35 percent ownership of Miller and allowed Gibson to significantly influence the investee's decisions.

  Prepare a schedule of cash collections

Phillip Corporation has the following sales budget: Credit sales are 80% of total sales. Collections of credit sales are 80% in the month of sale, 15% in the month after sale and 5% are never collected. Prepare a schedule of cash collections for June..

  Relation to company profitability and financial stability

What do these ratios show in relation to the company's profitability and financial stability?

  What amount of accrued liability

After the 2011 financial statements were issued, Haft received and accepted an IRS settlement offer of $275,000. What amount of accrued liability should Haft have reported in its December 31, 2011 balance sheet?

  Complete with respect to conversion costs

David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 19,000 units in its beginning work in process inventory that were 75% complete with resp..

  The franc zeppo venture manufactures a product that goes

the franc zeppo venture manufactures a product that goes during two processing departments. information relating to the

  Balance sheet equation format

balance sheet equation format to show the effect of the following transactions. Write the account names that will be used for each transaction.

  Illustrate what is her recognized gain or loss

In filing the estate tax return, the executor elects the alternate valuation date. Kelly sells the land on June 10, 2012, for $48,000. Illustrate what is her recognized gain or loss?

  Calculate sales in pounds to achieve pound600000 after tax

hand-in assignment questionthe income statement for abcs 2012 fiscal year is presented below. abc manufactures one type

  Joint income tax return with two separate schedule cs

Cooper and Brandy are married and file a joint income tax return with two separate Schedule Cs. Cooper is an independent security specialist who spent $560 on uniforms during the year. His laundry expenses for the uniforms were $112 for this year, pl..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd