double declining depreciation method

Calculate Declining Balance Method of Depreciation in Excel

The following are the financial statements of Nosker Company.

The following are the financial statements of Nosker Company.

Nosker Company Comparative Balance Sheets December 31
Assets		2019			2018
Cash		$38,000			$20,000
Accounts receivable		30,000			14,000
Inventory		27,000			20,000
Equipment		60,000			78,000
Accumulated depreciation—equipment		(29,000	)		(24,000	)
Total		$126,000			$108,000
Liabilities and Stockholders’ Equity
Accounts payable		$24,000			$15,000
Income taxes payable		7,000			8,000
Bonds payable		27,000			33,000
Common stock		18,000			14,000
Retained earnings		50,000			38,000
Total		$126,000			$108,000

Nosker Company Income Statement For the Year Ended December 31, 2019
Sales revenue		$242,000
Cost of goods sold		175,000
Gross profit		67,000
Operating expenses		24,000
Income from operations		43,000
Interest expense		3,000
Income before income taxes		40,000
Income tax expense		8,000
Net income		$32,000

Additional data:

1.		Dividends declared and paid were $20,000.
2.		During the year, equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
3.		All depreciation expense, $14,500, is in the operating expenses.
4.		All sales and purchases are on account.

 


[Net cash provided by oper. act. = Net inc. + (Depr. exp. - Incr. in accts. rec. - Incr. in inv. + Incr. in accts. pay. - Decr. In inc. tax. pay.)]
Compute free cash flow.
Free cash flow = $31,500 – $0 – $20,000 = $11,500
Here

Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $115,250. The seller agreed to allow a 6.00 percent discount because Southwest Milling paid cash.

Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $115,250. The seller agreed to allow a 6.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,300. Southwest Milling had to hire a specialist to calibrate the loader. The specialist’s fee was $1,210. The loader operator is paid an annual salary of $18,700. The cost of the company’s theft insurance policy increased by $1,890 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $6,100.

    

Required

a.	Determine the amount to be capitalized in an asset account for the purchase of the loader.    b. Record the purchase in general journal format. Explanation: a.  Discount: $115,250 × 6.00% = $6,915 The operator salary and increase in insurance are operating expenses.