This topic contains a solution. Click here to go to the answer

Author Question: On January 1, 2011, Borba, Inc. purchased a 100,000 machine with an estimated useful life of 10 ... (Read 365 times)

lracut11

  • Hero Member
  • *****
  • Posts: 536
On January 1, 2011, Borba, Inc. purchased a 100,000 machine with an estimated useful life of 10 years or 1,000,000 units and a 10,000 salvage value. The machine actually produced 120,000 units in 2011 and 110,000 units in 2012.
 
  Part A: Calculate depreciation expense and accumulated depreciation using the following three methods:
  December 31, 2011: Straight-line Activity Double-declining
  balance
  1 Depreciation expense  
  2 Accumulated depreciation  
 
  December 31, 2012: Straight-line Activity Double-declining
  balance
  3 Depreciation expense  
  4 Accumulated depreciation  
 
  Part B: In the first year of the machine's life, which method would show the LOWER amount for each of the following financial statement line items? Put an X in the appropriate box.
  Financial statement item Straight-line Double-declining balance
  1 Net income
  2 Income tax expense
  3 Retained earnings
  4 Total assets

Question 2

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit toAccounts Payable and a credit to Petty Cash.
 a. True
  b. False
 
   Indicate whether the statement is true or false



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

emsimon14

  • Sr. Member
  • ****
  • Posts: 344
Answer to Question 1

Part A:
December 31, 2011: Straight-line Activity Double-declining balance
1 Depreciation expense 9,000 10,800 20,000
2 Accumulated depreciation 9,000 10,800 20,000

December 31, 2012: Straight-line Activity Double-declining balance
3 Depreciation expense 9,000 9,900 16,000
4 Accumulated depreciation 18,000 20,700 36,000

Straight-line depreciation: (100,000  10,000) / 10 years = 9,000 per year
Activity depreciation: (100,000  10,000) / 1,000,000 units = 0.09 per unit
For 2011: 120,000 units x 0.09 per unit = 10,800
For 2012: 110,000 units x 0.09 per unit = 9,900
Double-declining balance depreciation:
For 2011: 100,000 x (2 / 10) = 20,000
For 2012: (100,000  20,000) x (2 / 10) = 16,000

Part B:
Straight-line Double-declining balance
1 Net income X
2 Income tax expense X
3 Retained earnings X
4 Total assets X

Answer to Question 2

False





 

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Did you know?

The average human gut is home to perhaps 500 to 1,000 different species of bacteria.

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

For a complete list of videos, visit our video library