On January 2, 2017, Snug Clothing Consignments purchased showroom fixtures for $19,000 cash, expecting the fixtures to remain in service for five years. Snug has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2018, Snug sold the fixtures for $8,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on October 31, 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Begin by recording the depreciation expense for January 1, 2018 through October 31, 2018. Date Oct. 31 Accounts and Explanation Debit Credit
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- Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
- Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.Farm Fresh Agriculture Company purchased Sunny Side Egg Distribution for $400,000 cash when Sunny Side had net assets worth $390,000. A. What is the amount of goodwill in this transaction? B. What is Farm Fresh Agriculture Companys journal entry to record the purchase of Sunny Side Egg Distribution? C. What journal entry should Farm Fresh Agriculture Company write when the company tests for impairment and determines that goodwill is worth $1,000 in the year following the purchase of Sunny Side?On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
- On January 2, 2017, Thrifty CLothing Consignments purchased showroom fixtures for $12,000 cash, expecting the fixtures to remain in service for five years. Thrifty had depreciated the fixtures on a double-declining-balance basis, with zero residual value. On August 31, 2018, Thrifty sold the fixtures for $6,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on August 31, 2018 (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.)On January 2, 2017, Favorite Clothing Consignments purchased showroom fixtures for $12,000 cash, expecting the fixtures to remain in service for five years. Favorite has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On September 30, 2018, Favorite sold the fixtures for $6,500 cash. Record both depreciation expense for 2018 and sale of the fixtures on September 30, 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) ... Begin by recording the depreciation expense for January 1, 2018 through September 30, 2018. Date Accounts and Explanation Debit Credit Sep. 30 Depreciation Expense-Fixtures 2,160 Accumulated Depreciation-Fixtures 2,160 To record depreciation on fixtures. Before recording the sale of the fixtures, let's calculate any gain or loss on the sale of the fixtures. Market value of assets received Less: Book value of…On January 2, 2018, McKnight Furniture purchased display shelving for $8,000 cash, expecting the shelving to remain in service for five years. McKnight depreciated the shelving on a double-declining-balance basis, with $1,500 estimated residual value. On September 30, 2019, the company sold the shelving for $2,400 cash. Record both the depreciation expense on the shelving for 2019 and its sale in September. Also show how to compute the gain or loss on the disposal of the shelving.
- On January 2, 2023, Thrifty Clothing Consignments purchased showroom fixtures for $11,000 cash, expecting the fixtures to remain in service for five years. Thrifty has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2024, Thrifty sold the fixtures for $5,000 cash. Record both depreciation expense for 2024 and sale of the fixtures on October 31, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2023 depreciation was recorded and posted in 2023.)On January 2, 2014, Pet Haven purchased fixtures for $32,400 cash, expecting the fixtures to remain in service for eight years. Pet Haven has depreciated the fixtures on a straight-line basis, with $6,000 residual value. On May 31, 2016, Pet Haven sold the fixtures for $22,925 cash. Record both depreciation expense for 2016 and sale of the fixtures on May 31, 2016. (Assume the modified half-month convention is used. Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by recording the depreciation expense for 2016. Date Jul. 31 Gain or (Loss) Accounts and Explanation Before recording the sale of the fixtures, let's calculate any gain or loss on the sale of the fixtures. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Now, record the sale of the fixtures on July 31, 2016. Date Jul. 31 Debit Accounts and Explanation Credit…On January 2, 2023, Favorite Clothing Consignments purchased showroom fixtures for $13,000 cash, expecting the fixtures to remain in service for five years. Favorite has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On September 30, 2024, Favorite sold the fixtures for $6,200 cash. Record both depreciation expense for 2024 and sale of the fixtures on September 30, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2023 depreciation was recorded and posted in 2023.) Begin by recording the depreciation expense for January 1, 2024 through September 30, 2024. Date Accounts and Explanation Debit Credit Sep. 30 Depreciation Expense—Fixtures 2,340 Accumulated Depreciation—Fixtures 2,340 To record depreciation on fixtures.…