Daniel Company started operations on January 1 of the current year. It is now De

Question

Daniel Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions: a. During the year, the company purchased office supplies that cost $3,000. At the end of the year, office supplies of $800 remained on hand. b. On January 1 of the current year, the company purchased a special machine for cash at a cost of $25,000. The machine's cost is estimated to depreciate at $2,500 per year c. On July 1, the company paid cash of $1,000 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year. Required: Complete the following schedule with the amounts that should be reported for the current year: Selected Balance Sheet Accounts at Amount to December 31 of the current year be Reported Assets Equipment Accumulated depreciation Net book value of equipment Office supplies Prepaid insurance Selected Income Statement Accounts forAmount to the Current Year ended December 31 be Reported Expenses Depreciation expense Office supplies expense Insurance expense

Explanation / Answer

Solution:

Selected Balance sheet accounts at Dec 31 of current year Amount to be reported Assets: Equipment $25,000.00 Accumulated depreciation $2,500.00 Net Book value of equipment $22,500.00 Office Supplies $800.00 Prepaid Insurance $750.00

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