no required down payment‚ (3) shared tax advantages‚ (4) assets and liabilities are not reported on the balance sheet. 6. You should explain to the president that depreciation is a process of allocating the cost of a plant asset to expense over its service (useful) life in a rational and systematic manner. Recognition of depreciation is not intended to result in the accumulation of cash for replacement of the asset. 7. (a) Salvage value is the expected cash value of the asset at the end of its
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342-346) Problem 7.8 – Trotman and Gibbins (2005) Barber Ltd has the following data for a recent period: $ 12‚000 30‚000 46‚200 7‚000 5‚500 Beginning inventory Purchases (all credit) Sales (all credit) Ending inventory count Operating expenses (all cash) The company’s mark-up is 40% on cost Assuming all purchases and sales were in single transactions prepare summary journal entries as well as closing entries using: 1. perpetual inventory 2. periodic inventory 1 Solution to
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fixed assets are reported in the balance sheet their approximate market values as of the balance sheet date? Explain. Fixed assets are appeared in a balance sheet at historical cost less depreciation up and coming. Depreciation influences the carrying value of an asset on the balance sheet. The historical expense will rise to the carrying value just if there has been no change recorded in the value of the asset since acquisition. In this manner‚ the accounting report does not demonstrate genuine value
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month end- $150 * Rent expense for February – refer to transaction #2 above * Insurance expense for February – refer to transaction #3 above * Depreciation expense on vehicle for February – refer to transaction #12 * Repair supplies on hand - $80 *Acct. No. Assets 101 Cash 102 Accounts Receivable 103 Prepaid Rent 104 Prepaid Insurance 105 Office Supplies 106 Repairs Supplies 107 Vehicle 108 Office Equipment 111 Accumulated Depreciation Liabilities 201 Accounts
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recording depreciation as an expense over a period is to spread the initial purchase price of the fixed asset over its useful life. Each time a company prepares its financial statements‚ it records a depreciation expense to allocate the loss in value of the machines‚ equipment or cars it has purchased. However‚ unlike other expenses‚ depreciation expense is a "non-cash" charge. This simply means that no money is actually paid at the time in which the expense is incurred.” Depreciation is a very
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6‚950 9‚620 9‚620 Rent Expense Accumulated Depreciation Sept 4 680 Sept. 30 680 Sept. 30 288 Supplies on Hand Income Sept. 5 942 Sept. 30 330 Sept. 30 680 Sept. 30 9‚620 Sept. 30 Bal 612 Sept. 30 515 Sept. 30 1‚800 Office Salaries Expense Sept. 30 288 Sept 30 1‚800 Sept. 30 1
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Financial Taxes‚ Cash Flows and Taxes – Assignment Week 2 Akhil Rangaraju MG 670 Fundamentals of Corporate Finance King Graduate School Question 1: Given the following information about Elkridge Sporting Goods‚ Inc.‚ construct a balance sheet for June 30‚ 2011. On that date the firm had cash and marketable securities of $25‚135‚ accounts receivable of $43‚758‚ inventory of $167‚112‚ net fixed assets of $325‚422‚ and other assets of $13‚125. It had accounts payables of $67‚855‚ notes payables
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$34‚630‚ costs of $10‚340‚ depreciation expense of $2‚520‚ and interest expense of $1‚750. If the tax rate is 35 percent‚ what is the operating cash flow‚ or OCF? Operating cash flow $ 17283 Calculations: Sales - Cost - Depreciation = EBIT(Earnings Before Interest Taxes –Depreciation Amortization) 34630 - 10340 - 2520 = 21770 EBIT - Interest = Taxable Income 21770 - 1750 = 20020 Taxes (35%) = 20020 x .35 = 7007 Net income: 20020 - 7007 = 13013 EBIT + depreciation - less taxes = OCF 21770 +
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loss account. Properties for sale: It belongs to the commodity‚ be treated as an inventory account for real estate industry. It can bring sales revenue after be sold. Question 2 a) What is purpose of amortization / depreciation? What is the difference between depreciation and
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Dec 31 Service Revenue 117‚500 Income Summary 117‚500 Close Service Revenue 31 Income Summary 42‚100 Salary Expense 33‚000 Supplies 2‚000 Depreciation Expense‚ furnitiure 1‚100 Depreciation Expense‚ building 6‚000 Close Expense 31 Income Summary 75‚400 Marcia Sandvold‚ capital 75‚400 Close Income Summary 31 Marcia Sandvold‚ capital
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