Bill’s Lawn Care Mini Practice Part 5 In June, Bill made several purchases to ac
ID: 2483842 • Letter: B
Question
Bill’s Lawn Care Mini Practice Part 5
In June, Bill made several purchases to accommodate his growing business.
June 2 Bill purchased a storage location for lawn care equipment, paid $45,000 for a building on 1 acre. The land is appraised at $8,000. The building has an estimated life of 10 years with a $5,000 salvage value. Bill paid $2,000 down and financed the remaining purchase price with a 5% 5 year note.
June 4 Bill purchased a trailer to haul lawn care equipment for $2,300; estimated life is 5 years with no salvage value. Bill paid for the purchase in cash.
June 5 Bill purchased a gas powered trimmer for $1,200 and a commercial leaf-blower for $1,500. Bill estimates they will each have a two year life and no salvage value. Bill paid for both of these pieces of equipment on account.
These are in addition to the three assets Bill acquired in May:
Date Item Cost Estimated Life Salvage Value
May 2 Truck $5,000 5 years $500
5 Lawn Mower $300 2 years $0
5 Aerator $500 2 years $0
Depreciation was recorded in May for these assets using the straight-line method however Bill is considering other depreciation methods and has asked you to prepare a comparison of the straight-line method with the double declining balance (200% DDB) method before he decides.
Instructions:
Using the chart of accounts provided below and the Excel template provided with this assignment, record the transactions for the new assets purchased in June, 2014. Start with Page 7 for the journal entries. Explanations are optional.
Prepare a monthly schedule of depreciation for each of the seven assets for 2014 using 1) straight-line and 2) 200% DDB. (Assume assets purchased before the 15th of the month will be depreciated as if owned for the entire month). Remember that you are calculating monthly depreciation, not annual and adjust your depreciation rate. Carry your depreciation rate to four decimals and round the depreciation expense to two decimals.
Bill has decided that equipment will be depreciated using straight-line and the building using 200% DDB. Prepare the adjusting journal entries for depreciation for the month of June, 2014. Start with Page 8 for the adjusting journal entries. Explanations are optional.
I need a general journal, a Deprciation Schedule SL and a Depreciation Schedules 200%DDB.. Thank you!
GENERAL JOURNAL Page DATE DESCRIPTION POST. REF. DEBIT CREDITExplanation / Answer
Schedules for depreciation
Similarly you can create schedules fro remaining assets
Asset 1 ) Truck cost 5000 Salvage Value 500 Life of asset 5 Under straight line method depreciation is calculated as = ( cost of asset- salvage value) / life of asset = ( 5000 -500) / 5 = 900 per year Depreciation rate = Depreciation per year / Cost of asset 18.0000% per year = 18/12, = 1.5000 per month Under double declining method rate of depreciation Normal depreciation = ( cost of asset) / life of asset = 5000 / 5 = 1000 per year Depreciation rate = 2 x Depreciation per year / Cost of asset 40.0000% per year = 40/12, = 3.3333 per month Straightline method Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 5000 1.5000 75 75 4925 June 14' 4925 75 150 4850 July 14' 4850 75 225 4775 August 14' 4775 75 300 4700 September 14' 4700 75 375 4625 October 14 ' 4625 75 450 4550 November 14' 4550 75 525 4475 December 14 ' 4475 75 600 4400 Double declining method As we are given monthly depreciation, we have applied depreciation at monthly outstanding balances Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 5000 3.3333 166.67 166.67 4833.34 June 14' 4833.34 3.3333 161.11 327.77 4672.23 July 14' 4672.23 3.3333 155.74 483.51 4516.49 August 14' 4516.49 3.3333 150.55 634.06 4365.94 September 14' 4365.94 3.3333 145.53 779.59 4220.41 October 14 ' 4220.41 3.3333 140.68 920.27 4079.73 November 14' 4079.73 3.3333 135.99 1056.26 3943.74 December 14 ' 3943.74 3.3333 131.46 1187.72 3812.28 Asset 2 ) Lawn Mover 300 Salvage Value 0 Life of asset 2 Under straight line method depreciation is calculated as = ( cost of asset- salvage value) / life of asset = ( 300-0) / 2 = 150 per year Depreciation rate = Depreciation per year / Cost of asset 50.0000% per year = 50/12, = 4.1667 per month Under double declining method rate of depreciation Normal depreciation = ( cost of asset) / life of asset = 300/2 = 150 per year Depreciation rate = 2 x Depreciation per year / Cost of asset 100.0000% per year = 100/12, = 8.3333 per month Straightline method Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 300 4.1667 12.50 12.50 287.50 June 14' 287.50 12.50 25.00 275.00 July 14' 275.00 12.50 37.50 262.50 August 14' 262.50 12.50 50.00 250.00 September 14' 250.00 12.50 62.50 237.50 October 14 ' 237.50 12.50 75.00 225.00 November 14' 225.00 12.50 87.50 212.50 December 14 ' 212.50 12.50 100.00 200.00 Double declining method As we are given monthly depreciation, we have applied depreciation at monthly outstanding balances Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 300 8.3333 25.00 25.00 275.00 June 14' 275.00 8.3333 22.92 47.92 252.08 July 14' 252.08 8.3333 21.01 68.92 231.08 August 14' 231.08 8.3333 19.26 88.18 211.82 September 14' 211.82 8.3333 17.65 105.83 194.17 October 14 ' 194.17 8.3333 16.18 122.01 177.99 November 14' 177.99 8.3333 14.83 136.84 163.16 December 14 ' 163.16 8.3333 13.60 150.44 149.56 Asset 3 ) Aerator 500 Salvage Value 0 Life of asset 2 Under straight line method depreciation is calculated as = ( cost of asset- salvage value) / life of asset = ( 500-0) / 2 = 250 per year Depreciation rate = Depreciation per year / Cost of asset 50.0000% per year = 50/12, = 4.1667 per month Under double declining method rate of depreciation Normal depreciation = ( cost of asset) / life of asset = 500/2 = 250 per year Depreciation rate = 2 x Depreciation per year / Cost of asset 100.0000% per year = 100/12, = 8.3333 per month Straightline method Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 500 4.1667 20.83 20.83 479.17 June 14' 479.17 20.83 41.66 458.34 July 14' 458.34 20.83 62.49 437.51 August 14' 437.51 20.83 83.32 416.68 September 14' 416.68 20.83 104.15 395.85 October 14 ' 395.85 20.83 124.98 375.02 November 14' 375.02 20.83 145.81 354.19 December 14 ' 354.19 20.83 166.64 333.36 Double declining method As we are given monthly depreciation, we have applied depreciation at monthly outstanding balances Month Depreciable cost Depreciation Monthly Depreciation Accumulated Book Value Rate Expense Depreciation May 14 ' 500 8.3333 41.67 41.67 458.33 June 14' 458.33 8.3333 38.19 79.86 420.14 July 14' 420.14 8.3333 35.01 114.87 385.13 August 14' 385.13 8.3333 32.09 146.97 353.03 September 14' 353.03 8.3333 29.42 176.39 323.61 October 14 ' 323.61 8.3333 26.97 203.35 296.65 November 14' 296.65 8.3333 24.72 228.07 271.93 December 14 ' 271.93 8.3333 22.66 250.73 249.27Related Questions
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