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E-18-2A

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E 18-2A (year 1, SL, $3,000, DDB $6,750)

Straight Line, Declining Balance and Sum of The Years Digits Methods. A light truck was purchased on Jan. 1 at a cost of $27,000. It is expected to serve for 8 years and have a salvage value of $3,000. Calculate the depreciation expense for the first and third years of the trucks life using the following methods.

1. Straight line

2. Double declining balance (round to two decimal places).

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3. Sum of the years digits (round to two decimal places).

2

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1 6 – 9

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16-9A

pts.

1

pense

,10

7,104

x

5,200

0%

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec. 31

Allowance for Bad Debts 6,620

Calculations:

Accounts receivable, December 31, 20– $ 30,000

Allowance for bad debts, new balance 6,950
Net realizable value

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec. 31 Bad Debt Expense

Allowance for Bad Debts 5,328

Calculations:
Credit Sales x Percentage

Adjustment Amount

$ 355,200

5%

Accounts receivable, December 31, 20– $ 30,000

Allowance for bad debts, new balance

Net realizable value

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec. 31 Bad Debt Expense

Allowance for Bad Debts 6,085

Calculations:

Estimate through analysis (provided)

Allowance for bad debts, previous balance

Adjustment amount

Accounts receivable, December 31, 20– $ 30,000

Allowance for bad debts, new balance 5,685
Net realizable value

Problem

Name:
1

0
1a.
GENERAL JOURNAL
Date Account Debit Credit
20–
Dec. 3 Bad Debt E

x 7 4
Allowance for Bad Debts
Calculations:
Credit Sales Percentage = Adjustment Amount
$ 3

5 2. $7,104
Accounts receivable, December 31, 20– $ 30,000
Allowance for bad debts, new balance 7,434
Net realizable value $ 22,566
1b.
Bad Debt Expense 6,620
Estimate through analysis (provided) $

6,950
Allowance for bad debts, previous balance 330
Adjustment amount $ 6,620
$ 23,050
2a.
5,32

8
=
1. $ 5,328
4,928
$ 25,072
2b.
6,085
$

5,685
400
$ 6,085
$ 24,3

15

E18-2A

Name:

1.

ly

2.
Estimated Life Percentage

/ years =

x 2

x

= Depreciation

Year 1
Year 3

x

8 9

Original Cost – Salvage Value =

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Rate = Depreciation

Year 1 $ 27,000

Mark Sears: Enter as a formula

Year 3

25%
Mark Sears: Enter as a fraction

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Exercise 18-2A
10pts.
Straight-Line Method
Original Cost Salvage Value Estimated Life Year Depreciation
years
Year 1
Year 3
Double-Declining-Balance Method
100% Mark Sears: Enter as a formula
Double-declining rate
Book Value Rate
Year 2
3.
Sum-of-the-Years’-Digits Method
[Life (Life + 1)] / 2 = Denominator
25%
Mark Sears: Enter as a formula
Depreciable Cost
$ 27,000 3,00 $ 24,000
Mark Sears: Enter as a formula
Depreciable Cost x
25%
Mark Sears: Enter as a fraction

2/25
Mark Sears: Enter as a formula
$ 20,225 5/56

P18-7A

Name:

1.
Straight-Line Method

Original Cost Salvage Value Estimated Life

8 years

Mark Sears: Enter as a formula

Year

Book Value

0 $ 59,000
1 $ 7,000

2 $ 7,000

3 $ 7,000

4 $ 7,000

5 $ 7,000

6 $ 7,000

7 $ 7,000

8 $ 7,000

2.
Double-Declining-Balance Method

Estimated Life Percentage

100% / 8 years =

x 2

Double-declining rate

Mark Sears: Enter as a formula

Year Annual Depreciation Book Value

Book Value x Rate = Depreciation

0

1 $ 59,000.00 25.0%

2

25.0%

3

25.0%

4

25.0%

Mark Sears: Enter book values for Years 1-8 as formulas

5

25.0%

Mark Sears: Enter book values for Years 1-8 as formulas

6

25.0%

Mark Sears: Enter book values for Years 1-8 as formulas

7

25.0%

Mark Sears: Enter book values for Years 1-8 as formulas

8

25.0%

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter book values for Years 1-8 as formulas

3.
Sum-of-the-Years’-Digits Method

[Life x (Life + 1)] / 2 = Denominator

8 9

Mark Sears: Enter book values for Years 1-8 as formulas

Original Cost – Salvage Value = Depreciable Cost

$ 59,000 $ 3,000

Year Annual Depreciation Book Value

Depreciable Cost
x Rate = Depreciation

0 $ 59,000.00

1

2 $ 56,000.00

3 $ 56,000.00

Mark Sears: Enter as a formula

4 $ 56,000.00

Mark Sears: Enter as a formula

5 $ 56,000.00

Mark Sears: Enter as a formula

6 $ 56,000.00

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter as a formula

7 $ 56,000.00

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter as a formula

8 $ 56,000.00

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter as a formula

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter as a formula

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter book values for Years 1-8 as formulas

Problem 18-7A 10pts.
Yearly Depreciation
$ 59,000 $ 3,000 $ 7,000
Annual Depreciation
52,000
Mark Sears: Enter book values for Years 1-8 as formulas
45,000
Mark Sears: Enter book values for Years 1-8 as formulas
38,000
Mark Sears: Enter book values for Years 1-8 as formulas
31,000
Mark Sears: Enter book values for Years 1-8 as formulas
24,000
Mark Sears: Enter book values for Years 1-8 as formulas
17,000
Mark Sears: Enter book values for Years 1-8 as formulas
10,000
Mark Sears: Enter book values for Years 1-8 as formulas
3,000
Mark Sears: Enter book values for Years 1-8 as formulas
12.5%
Mark Sears: Enter as a formula

25.0%
$ 59,000.00
$ 14,750.00
Mark Sears: Enter as a formula
44,250.00
Mark Sears: Enter book values for Years 1-8 as formulas
$ 44,250.00 $ 11,062.50
Mark Sears: Enter as a formula
33,187.50
Mark Sears: Enter book values for Years 1-8 as formulas
$ 33,187.50 $ 8,296.88
Mark Sears: Enter as a formula
Mark Sears: Enter book values for Years 1-8 as formulas 24,890.62
Mark Sears: Enter book values for Years 1-8 as formulas
$ 24,890.62 $ 6,222.66
Mark Sears: Enter as a formula
18,667.96
Mark Sears: Enter book values for Years 1-8 as formulas
$ 18,667.96 $ 4,666.99
Mark Sears: Enter as a formula
14,000.97
Mark Sears: Enter book values for Years 1-8 as formulas
$ 14,000.97 $ 3,500.24
Mark Sears: Enter as a formula
10,500.73
Mark Sears: Enter book values for Years 1-8 as formulas
$ 10,500.73 $ 2,625.18
Mark Sears: Enter as a formula
7,875.55
Mark Sears: Enter book values for Years 1-8 as formulas
$ 7,875.55 $ 1,968.89
Mark Sears: Enter as a formula
5,906.66
Mark Sears: Enter book values for Years 1-8 as formulas
36
Mark Sears: Enter as a formula
$ 56,000
Mark Sears: Enter as a formula
$ 56,000.00 2/9
Mark Sears: Enter as a fraction
$ 12,444.44
Mark Sears: Enter as a formula
46,555.56
Mark Sears: Enter book values for Years 1-8 as formulas
7/36
Mark Sears: Enter as a fraction
$ 10,888.89
Mark Sears: Enter as a formula
35,666.67
Mark Sears: Enter book values for Years 1-8 as formulas
1/6
Mark Sears: Enter as a fraction
$ 9,333.33
Mark Sears: Enter as a formula
26,333.34
Mark Sears: Enter book values for Years 1-8 as formulas
5/36
Mark Sears: Enter as a fraction
$ 7,777.78
Mark Sears: Enter as a formula
18,555.56
Mark Sears: Enter book values for Years 1-8 as formulas
1/9
Mark Sears: Enter as a fraction
$ 6,222.22
Mark Sears: Enter as a formula
12,333.34
Mark Sears: Enter book values for Years 1-8 as formulas
1/12
Mark Sears: Enter as a fraction
$ 4,666.67
Mark Sears: Enter as a formula
7,666.67
Mark Sears: Enter book values for Years 1-8 as formulas
1/18
Mark Sears: Enter as a fraction
$ 3,111.11
Mark Sears: Enter as a formula
4,555.56
Mark Sears: Enter book values for Years 1-8 as formulas
1/36
Mark Sears: Enter as a fraction
$ 1,555.56
Mark Sears: Enter as a formula
3,000.00
Mark Sears: Enter book values for Years 1-8 as formulas

E16-7A

10pts.
GENERAL JOURNAL

Date Account Debit Credit

8 Bad Debt Expense

1,745

15 Bad Debt Expense

1,300

Wrote off uncollectible account

2 Accounts Receivable/V. Lawrence 1,745

1,745

2

1,745

Accounts Receivable/V. Lawrence 1,745

May 15 Accounts Receivable/D. Utter 1,300
Uncollectible Accounts Recovered 1,300

Reinstated account receivable

15 Cash 1,300

Accounts Receivable/D. Utter 1,300

Collection on account
20-1
May 1,745
Accounts Receivable/V. Lawrence
Wrote off uncollectible account
July 1,300
Accounts Receivable/D. Utter
Sept.
Uncollectible Accounts Recovered
Reinstated account receivable
Cash
Collection on account
20-2

Sheet1

E16-7A

10 points

3 points

2 points

E18-2A 10 points

*requirement 1 3 points
*requirement 2 3 points

*requirement 3

10 points

*requirement 1 3 points
*requirement 2 3 points
*requirement 3 4 points

Week 1 Grading Rubric
Point Available Points Earned
10 points
P16-9A
*requirement 1 3 points
*requirement 2
*requirement 3 2 points
*requirement 4
4 points
E18-7A
Total Score

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