We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

# Trenton Company Essay Sample

The whole doc is available only for registered users OPEN DOC

Get Access

## Trenton Company Essay Sample

On January 1, 2010, Trenton Company purchased a machine costing \$50,000. Trenton also incurred the following costs: transportation, \$1,000; installation, \$2,000; and sales tax, \$3,000. Prepare the journal entry to record the machine acquisition assuming cash was paid.

Exercise 2:
Hi-Crest Company purchased a machine on January 1, 2010, for \$300,000. The machine has an estimated useful life of 5 years and a \$10,000 residual value. Calculate depreciation expense and the year-end book value for 2010 and 2011 using the double declining-balance method of depreciation.

*\$120,000 = \$300,000 2/5
**\$72,000 = \$180,000 2/5
Exercise 3:
Hubbard Company purchased a truck on January 1, 2009, at a cost of \$34,000. The company estimated that the truck would have a useful life of 4 years and a residual value of \$4,000. A. Calculate depreciation expense under straight line and double declining balance for 2009-2012. B. Which of the two methods would result in lower net income in 2010 and 2012? A.

Straight-line: (\$34,000 – 4,000)/4 years = \$7,500
Declining-balance:
2009 ¼ x 200% x \$34,000 = \$17,000
2010 ¼ x 200% x (\$34,000 – \$17,000) = \$8,500
2008 ¼ x 200% x (\$34,000 – \$25,500) = \$4,250
2009 Book value \$4,250 – \$4,000 target book value = \$250
B. Lower net income: 2010, double declining-balance; 2012, straight-line. Exercise 4:
Beckworth Company purchased a truck on January 1, 2009, at a cash cost of \$10,600. The estimated residual value was \$400 and the estimated useful life 4 years. The company uses straight-line depreciation computed monthly. On July 1, 2012, the company sold the truck for \$1,900 cash. A. What was the depreciation expense amount per month?

B. What was the amount of accumulated depreciation at July 1, 2012? C. Give the required journal entries on the date of disposal, July 1, 2012. (Assume no 2012 depreciation had yet been recorded)

Exercise 5:
Bennett Corporation sold a piece of equipment on June 30, 2012 for \$50,000 cash. The equipment had been purchased on January 1, 2008 for \$150,000. It had an estimated useful life of 6 years and a \$30,000 residual value. Bennett Corp. has been using the straight-line method of depreciation and has a year-end of December 31st. Prepare any necessary journal entries on June 30, 2012 assuming that 2012 depreciation expense has not been recorded.

*[(\$150,000 – \$30,000) 6] 6/12
** [(\$150,000 – \$30,000) 6] 4.5 years
Exercise 6:
Spa Sources Corporation purchased a machine that had an original cost of \$60,000 and an estimated residual value of \$10,000. The useful life was expected to be 8 years and straight-line depreciation is used. At the end of 2010, the book value of the machine was \$35,000. Spa Sources sold the machine for \$32,000 cash on October 1, 2011. A. Prepare the journal entry to record depreciation for 2011 up to the date of sale. B. Prepare the journal entry to record the sale of the machine.

Exercise 7:
Give the required adjusting journal entry at December 31, 2011, the end of the annual accounting period for the three items below. Assume that no adjusting entries have been made during the year. If no entry is required, explain why. A. Polk Company acquired a patent that cost \$6,000 on January 1, 2011. The patent was registered on January 1, 2006. The useful life of a patent is 20 years from registration. B. Polk Company acquired a gravel pit on January 1, 2011, that cost \$24,000. The company estimates that 30,000 tons of gravel can be extracted economically. During 2011 4,000 tons were extracted and sold. C. On January 1, 2011, Polk Company acquired a used dump truck that cost \$6,000 to use hauling gravel. The company estimated a residual value of 10% of cost and a useful life 4 years. The company uses straight-line depreciation.

We can write a custom essay

Order an essay

## You May Also Find These Documents Helpful

Financial Statements

Q.1 Which stakeholders require financial reports and why? Stakeholders of financial reporting can be grouped into a) Internal stakeholders  a. Managers and Owners: Financial reporting provides a comprehensive view of financial position of an organization, financial analysis is performance based on data provided in financial reports. This information is used by managers and owners to perform smooth operation and formulate contractual term between the company...

Generally Accepted Accounting Principles and Sunset Boards

Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company's financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family....

Total Depreciation

Howarth Manufacturing Company purchased a lathe on June 30, 2007, at a cost of \$80,000. The residual value of the lathe was estimated to be \$5,000 at the end of a five-year life. The lathe was sold on March 31, 2011, for \$17,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of...

Temporary Differences

Required: a. Define the term temporary difference. b. List the examples of temporary differences contained in SFAS No. 109. c. Defend inter-period income tax allocation. a. Temporary Difference – Definition An assumption inherent in an enterprise's statement of financial position prepared in accordance with generally accepted accounting principles is that the reported amounts of assets and liabilities will be recovered and settled, respectively. Based on...

Accrual Basis and Cash Basis Accounting Paper

Pretty much any and all businesses need feedback to see how they are doing and determine if any changes are necessary. This information comes as a result of accounting practices. This information is so crucial that a set of rules have been established to make sure that the information is not only properly represented but in a uniform that is easy to understand for all...

### Essays 57,473

300+
Materials Daily
100,000+ Subjects
2000+ Topics
Free Plagiarism
Checker
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

Sorry, but only registered users have full access

immediately?

Become a member

Thank You A Lot!

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Couldn't Find What You Looking For?