Tuesday, 23 October 2012

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost \$25,000 and has an estimated useful life of four years and an estimated salvage value of \$4,500.

 Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost \$25,000 and has an estimated useful life of four years and an estimated salvage value of \$4,500.

 Requirement 1:

 (a) Calculate depreciation expense for each year of the truck's life using Straight-line depreciation. (Omit the "\$" sign in your response.)

 Depreciation expense \$ per year

 (b) Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation. (Omit the "\$" sign in your response.)

 Year Depreciation Expense 1 \$ 2 \$ 3 \$

 Requirement 2: Calculate the truck's net book value at the end of its third year of use under each depreciation  method. (Omit the "\$" sign in your response.)

 Depreciation method Net book value Straight-line depreciation \$ Double-declining-balance depreciation \$

 Requirement 3: Assume that Kleener Co. had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay \$6,550 for the truck. Should the depreciation method used by Kleener Co. affect the decision to sell the truck? Double-declining- depreciation method should used for sell the truck.

A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:

 A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:

 Accounts receivable \$ 21,800 Less: Allowance for bad debts (2,300 ) \$ 19,500

 The company's accounting records revealed the following information for the year ended December 31, 2011:

 Sales (all on account) \$ 155,000 Cash collections from customers 141,000 Accounts written off 2,800 Bad debts expense (accrued at 12/31/11) 5,300

 Required:

 Calculate the net realizable value of accounts receivable at December 31, 2011, and allowance for bad debts for Gibbs Co., as of that point in time. (Hint: Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts.) (Amounts to be deducted should be indicated with minus sign. Omit the "\$" sign in your response.)

 At December 31, 2011: Accounts receivable \$ Less: Allowance for bad debts \$

Refer to the information given below.

 Refer to the information given below.

 a. The August 31 balance shown on the bank statement is \$9,818. b. There is a deposit in transit of \$1,260 at August 31. c. Outstanding checks at August 31 totaled \$1,888. d. Interest credited to the account during August but not recorded on the company's books amounted to \$116. e. A bank charge of \$33 for checks was made to the account during August. Although the company was expecting a charge, its amount was not known until the bank statement arrived. f. In the process of reviewing the canceled checks, it was determined that a check issued to a supplier in payment of accounts payable of \$625 had been recorded as a disbursement of \$341. g. The August 31 balance in the general ledger Cash account, before reconciliation, is \$9,391.

 Required: (a) Prepare the adjusting journal entry (or entries) that should reflect the reconciling items. (Omit the "\$" sign in your response.)

 General Journal Debit Credit Bank service charges Account payable Interest revenue Cash

 (b) What is the amount of cash to be included in the August 31 balance sheet for the bank account reconciled? (Omit the "\$" sign in your response.)

 Amount of cash \$