1. Tecom accepts the NOVA credit card for credit card sales. Tecom sends credit
ID: 2454546 • Letter: 1
Question
1. Tecom accepts the NOVA credit card for credit card sales. Tecom sends credit card receipts to NOVA on a weekly basis. NOVA charges Tecom a 2% fee. Tecom usually receives payment from NOVA within a week. Prepare entries in general journal form to record the following transactions of Tecom involving the NOVA credit card.
March 11
Sold merchandise for $4,500 to customers who use the NOVA credit card and deposited the credit card receipts.
March 20
Received cash proceeds less the service charge for the March 14 deposit to NOVA.
2. A company's property records revealed the following information about its plant assets:
Machine No.
Cost
Salvage Value
Purchase Date
Depreciation Method and Estimate Life
1
$42,000
$3,000
10/1/08
Straight-line (3 years)
2
86,000
8,600
7/1/08
Double-declining-balance (5 years)
Calculate the depreciation expense for each machine for the year ended December 31, 2010 and for the year ended December 31, 2009.
Machine 1:
2009 _______________________
2010 _______________________
Machine 2:
2009 _______________________
2010 _______________________
March 11
Sold merchandise for $4,500 to customers who use the NOVA credit card and deposited the credit card receipts.
March 20
Received cash proceeds less the service charge for the March 14 deposit to NOVA.
Explanation / Answer
Answer(1)
Feedback: $4,500 x .02 = $90 Credit Card Expense
March 11 Accounts Receivable – NOVA 4,410
Credit Card Expense 90
Sales 4,500
March 20 Cash 4,410
Accounts Receivable – NOVA 4,410
Answer (2)
Machine 1
Cost=$42000
Salvage Value=$3000
Assets useful life=3 Years
Depreciation=$42000-$3000/3=$13000 in 2009 & 2010
Machine 2
Cost=$86000
Salvage value=$8600
Assets useful life=5 Years
Straight line depreciation=$86000-$8600/5=$15480
Straight Line Rate=$15480/$86000=18%
Double declining rate=2*18%=36%
Depreciation in 2009=$77400*36%=$27864
Depreciation in 2010=$77400-$27864=$49536*36%=$17832.96
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.