8) On 01 March 2016, SHOES AND SOCKS Ltd bought 02 vans and 03 flip flops from B

Question

8) On 01 March 2016, SHOES AND SOCKS Ltd bought 02 vans and 03 flip flops from BEACH Ltd by signing a 01 year 8% note payable for total liability. The vans cost $10,000 each and flip flops cost $15.000 each plus sales tax @ 15%. Company's policy is to depreciate vans over four years and flip flops over five years on straight line basis. Salvage value is $1,000 each for vans and $2,000 each for flip flops. What will be the total depreciation and interest expense of SHOES AND SOCKS Ltd for the year ended 31 December 2016? Depreciation: $14.400, Interest: $5.980 Depreciation: $16,100, Interest:$5,235 Depreciation: $12.075, Interest: $3,900 Depreciation: $10,800, Interest: $4,485

Explanation / Answer

Vans (2) 20000 Sales tax 15% 3000 Total 23000 31-Dec-16 Depreciation (23000-2000)/4*10/12 4375 Flip Flops (3*15000) 45000 Sales tax 15% 6750 Total 51750 31-Dec-16 Depreciation (51750-6000)/5*10/12 7625 Option D is correct Depreciation $10800 Interest 4485

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