Selected ledger account balances for Business Solutions follow. For Three Months

Question

Selected ledger account balances for Business Solutions follow. For Three Months Ended December 31, 2016 For Three Months Ended March 31, 2017 Office equipment S 8,200 24,000 1,500 32,184 83,660 S 8,200 820 24,000 3,000 45,900 121,368 Total revenue Total assets Required 1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2017. Compute amounts for the year ended December 31, 2017, for Depreciation expense Office equipment and for Depreciation expense-Computer equipment (assume use of the straight-line method) Office equipment Computer equipment . $ 1,640 6,000 2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2017? Book Value Office equipment 3. Compute the three-month total asset turnover for Business Solutions as of March 31, 2017. (Round your answer to 2 decimal places.) times

Explanation / Answer

1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2017. Compute amounts for the year ended December 31, 2017, for Depreciation expense - Office equipment and for Depreciation expense - Computer equipment (assume use of the straight-line mthod).

Depreciation Expense for Office Equipment = ($820 - $410) x (12 / 3)

......................................................................= $1,640

Depreciation Expense for Computer Equipment = ($3,000 - $1,500) x (12 / 3)

.............................................................................= $6,000

2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2017?

Book Value of Office Equipment = ($8,200 - $410 - $1,640)

....................................................= $6,150

Book Value of Computer Equipment = ($24,000 - $1,500 - $6,000)

..........................................................= $16,500

3. Compute the three-month total asset turnover for Business Solutions as of March 31, 2017.

Asset Turnover Ratio = Net Sales / Average Total Assets

....................................= $45,900 / [($83,660 + $121,368) / 2]

....................................= $45,900 / $102,364

....................................= 0.45

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