Question

#32 The fixed assets have estimated useful lives as follows: Building - 31.5 years Computer Equipment...

#32

The fixed assets have estimated useful lives as follows:
Building - 31.5 years
Computer Equipment - 5.0 years
Office Equipment - 7.0 years

Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building’s scrap value is $500. The office equipment has a scrap value of $500. The computer equipment has no scrap value. Calculate the depreciation for one month.

~~~~~Below is the information for #32

June 16: Byte purchased a building and the land it is on for $113,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $18,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $11,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1.

           Account Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance
Number Name Debit Credit Debit Credit Debit Credit
1110 Cash    87,962.02               -                 -                 -      87,962.02               -  
1120 Accounts Receivable      1,135.00               -        5,750.00               -        6,885.00               -  
1130 Prepaid Insurance      6,480.00               -                 -           270.00      6,210.00               -  
1140 Prepaid Rent      4,200.00               -                 -        2,100.00      2,100.00               -  
1150 Office Supplies         530.00               -                 -           316.00         214.00               -  
1211 Office Equip.      2,011.00               -                 -                 -        2,011.00               -  
1212 Accum. Depr.-Office Equip.               -                 -                 -            25.90               -            25.90
1311 Computer Equip. 203,520.00               -                 -                 -   203,520.00               -  
1312 Accum. Depr.-Computer Equip.               -                 -                 -        2,416.67               -        2,416.67
1411 Building Cost    95,000.00               -                 -                 -      95,000.00               -  
1412 Accum. Depr.-Building               -                 -                 -           250.00               -           250.00
1510 Land    18,000.00               -                 -                 -      18,000.00               -  
2101 Accounts Payable               -        1,395.00               -                 -                 -        1,395.00
2102 Advanced Payments               -                 -                 -                 -                 -                 -  
2103 Interest Payable               -                 -                 -        1,305.11               -        1,305.11
2105 Salaries Payable               -                 -                 -           501.00               -           501.00
2106 Income Taxes Payable               -                 -                 -                 -                 -                 -  
2201 Mortgage Payable               -   101,700.00               -                 -                 -   101,700.00
2202 Notes Payable               -      93,750.00               -                 -                 -      93,750.00
3100 Capital Stock               -   211,176.00               -                 -                 -   211,176.00
3200 Retained Earnings               -                 -                 -                 -                 -                 -  
3300 Dividends      1,432.98               -                 -                 -        1,432.98               -  
4100 Computer & Consulting Revenue               -      16,400.00               -        5,750.00               -      22,150.00
5010 Rent Expense               -                 -        2,100.00               -        2,100.00               -  
5020 Salary Expense      1,670.00               -           501.00               -        2,171.00               -  
5030 Advertising Expense         325.00               -                 -                 -           325.00               -  
5040 Repairs & Maint. Expense      1,290.00               -                 -                 -        1,290.00               -  
5050 Oil & Gas Expense         865.00               -                 -                 -           865.00               -  
5080 Supplies Expense               -                 -           316.00               -           316.00               -  
5090 Interest Expense               -                 -        1,305.11               -        1,305.11               -  
5100 Insurance Expense               -                 -           270.00               -           270.00               -  
5110 Depreciation Expense               -                 -        2,692.57               -        2,692.57               -  
5120 Income Tax Expense               -                 -                 -                 -                 -                 -  
     
     
     
     
     
TOTAL 424,421.00 424,421.00    12,934.68    12,934.68 434,669.68 434,669.68
NET INCOME      
     
Business   Accounting   
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Homework Answers

Answer #1
Calculation of Depreciation under SLM method for the month of June:
Asset Details Cost($) Salvage Value($) Life Depreciation($)
Building 95000 500 31.5 250
Computer Equipment 203520 0 5 3392
Office Equipment 2011 500 7 18
Total Depreciation 3660
Note:
Depreciation per month Formula = (Cost-Salvage value)/(Life*12)
Entry to be passed for rectification of Depreciation:
Account name Debit($) Credit($)
Depreciation 975.33
    Acc.Depreciation-Computer 975.33
(3392-2416.67)
Acc.Depreciation-Off.Equip 7.91
     Depreciation 7.91
(25.9-18)
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