Aan Company purchased machinery on January 1, 2023, for $50,000. The machinery has an estimated useful life of 10 years and a residual value of $5,000. The company uses the straight-line method for depreciation. Calculate the annual depreciation expense and the accumulated depreciation at the end of three years. Explain your steps. YanZ Corporation, a retail company, started operations on January 1, 2022, with an initial capital of $150,000. Throughout the year, the company made cash sales totalling $200,000 and credit sales of $80,000. The cost of goods sold (COGS) was 60% of total sales. Operating expenses amounted to $50,000, and the company had collected $60,000 in cash from its credit sales by year-end. Additionally, YanZ paid dividends of $15,000. Prepare an income statement and calculate the ending balance in the retained earnings account as of December 31, 2022.

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.

Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.

Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset, Dinnell records depreciation expense for one-half year. During 2020, Asset A was sold for 7,000. Required: Prepare the journal entries to record depreciation on each asset for 2017 through 2020 and the sale of Asset A. Round all answers to the nearest dollar.

Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.

Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.

The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.

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?

Aan Company purchased machinery on January 1, 2023, for $50,000. The machinery has an estimated useful life of 10 years and a residual value of $5,000. The company uses the straight-line method for depreciation. Calculate the annual depreciation expense and the accumulated depreciation at the end of three years. Explain your steps. YanZ Corporation, a retail company, started operations on January 1, 2022, with an initial capital of $150,000. Throughout the year, the company made cash sales totalling $200,000 and credit sales of $80,000. The cost of goods sold (COGS) was 60% of total sales. Operating expenses amounted to $50,000, and the company had collected $60,000 in cash from its credit sales by year-end. Additionally, YanZ paid dividends of $15,000. Prepare an income statement and calculate the ending balance in the retained earnings account as of December 31, 2022.

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