Title: Goods Sold, Depreciation, and Year-End Entries Task 1: Calculate the annu

Question

Title: Goods Sold, Depreciation, and Year-End Entries

Task 1: Calculate the annual depreciation for the following assets for the entire lifespan of each asset. Each asset will have a different method to utilize. In addition, complete the applicable journal entries for each asset for tax year 2014 and submit using the journal entry template.

Land: 58 acres valued at $172,000, inherited, currently in Year 3.

Building: Built in 2011—started to use on 1/1/2012, basis $225,000, residual value $10,000, 30-year life uses straight-line depreciation—currently in Year 3.

Equipment 2: Straight line cost $12,000, $2,000 residual value, five-year life—purchased 10/1/2012, currently in Year 3.

Truck—Sum of Years Digit: Cost $24,000, no residual value, five years, purchased and started using on 1/1/2013—currently Year 2.

Back Hoe—Units Of Production: Cost $8,000, no residual value, total use hours 10,000 or six years, used of 2,500 hours in 2013—started using on 1/1/2013—currently in Year 2.

Trailer—Double Declining Balance: Cost $4,000, no residual value, five-year life—started to use 6/1/2012— currently in Year 3.

Cost of Goods Sold: Calculate the cost of goods sold using LIFO for the trees, bushes, and mulch, independently using the following information. Use those cumulative amounts to calculate the gross income for 2014.

1. Trees:

2014 Annual sales of 6,430 units.

Ending inventory is 1,825 units.

2. Bushes:

2013 Annual Sales of 5,175 units.

Ending inventory is 1,350

3. Mulch:

2013 Annual Sales of 3,475 units

Ending inventory is 1,775

$14,400

Task 2: Using the business scenario of LRU and the adjustment data provided below, complete the end of year adjusting and closing entries.

Adjustments needed:

Depreciation - Equipment 2

Depreciation - Truck

Depreciation - Backhoe

Depreciation - Trailer

Prepaid Insurance

Unearned income 40% completed

Wage expense due - $3,200

Cash Reserve

Office supplies remaining - $75

Calculate sales tax payable - due 1/28

Interest payable

COGS - Trees

COGS - Bushes

COGS - Mulch

Units Unit Cost Total Cost Beginning Inventory 3,895 $45 $175,275 Purchase 1 2,910 $43 $125,130 Purchase 2 950 $46 $43,700 Purchase 3 - Dec 500 $40 $20.000

Explanation / Answer

Land-Not depreciable assets as unlimited life

Building=

                                    7,167.00 for 30 years starting from 2011

                                                                                              2,000.00 yearly for next 3 years

2,000*3/12=500 for 4th year (Oct to Dec=3 months)

Truck

Back Hoe

Trailor

Double declining

Depreciation Rate = Accelerator × Straight Line Rate

Depreciation-Building Straight-line Method Depreciable Amount Useful Life Depreciable Amount Cost-Salvage Value (225000-10000)/30

                                    7,167.00 for 30 years starting from 2011

Depreciation-Equipment Straight-line Method Depreciable Amount Useful Life Depreciable Amount Cost-Salvage Value (12000-2000)/5

                                                                                              2,000.00 yearly for next 3 years

2,000*3/12=500 for 4th year (Oct to Dec=3 months)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.