ACCOUNTING FOR DEPRECIABLE ASSETS

Instructions:

Using the information provided below:

1.

Calculate the annual depreciation for the depreciable assets in 2013.

2.

Prepare the journal entries (using correct dates and explanations) that are necessary

to record the following:

the purchase of the assets bought in 2013

the depreciation for each of the depreciable assets for the year ended Dec. 31, 2013

the potential sale of the truck on December 31, 2016 using the information provided

3.

Enter the post references in the journal for journal entries pepared in Step 2.

(note: only include post references for the entries actually posted).

4.

Complete the financial statements for the year ended December 31, 2013.

(NOTE: current portion of note payable is $52,800)

5.

Answer questions a-f.

In 2012 and 2013, Fish & Bait Company had in the following transactions for fixed assets:

Date

Transaction

Depreciation Method

Life

Cost

Salvage Value

1/1/2012

Purchased land

N/A

N/A

$ 124,225

N/A

6/30/2012

Purchased machinery

Units-of-prod.

24,000

hours

$ 132,000

12,000

1/5/2013

Purchased truck

DD balance

5

years

$ 65,000

6,000

10/1/2013

Purchased store equip.

Straight-line

8

years

$ 80,000

8,000

Additional information:

The company paid $5,000 cash for the truck and signed a loan for the remainder of the purchase.

The company paid cash for the store equipment.

The machinery was actually used for the following number of hours:

2012

2,900

hours

2013

4,100

hours

Assume, on December 31, 2016, the company sells the truck for cash of

$8,000

1.

CALCULATE DEPRECIATION

Use the space provided below to calculate the 2013 depreciation for the machinery:

Complete the table below to help calculate the annual depreciation for the truck:

Book Value

Annual

At the End of the Year

at Beginning

Deprec.

Deprec.

Accum.

Book

Year

of Year

Rate

Expense

Deprec.

Value

2013

2014

2015

2016

2017

Use the space provided below to calculate the 2013 depreciation for the store equipment:

2.	PREPARE JOURNAL ENTRIES
	FISH & BAIT COMPANY
	General Journal
										Page	3
	DATE		DESCRIPTION						POST.	DEBIT	CREDIT
	2013								REF.
	DATE		DESCRIPTION						POST.	DEBIT	CREDIT
	2016								REF.

3. UPDATED LEDGER (Journal entries have been posted for you to save time--you need to only record post reference in the journal).
	Cash #110				Machinery #152				Accounts Payable #220				Cost of Goods Sold #500				Office Rent Expense #651
Beg. Balance	110,320			Beg. Balance	132,000			Beg. Balance		23,430		Beg. Balance	0			Beg. Balance	0
Annual activity	1,072,310	1,070,060		Annual activity				Annual activity	729,345	736,870		Annual activity	729,150	3,800		Annual activity	24,000
subtotal	112,570			End. Balance	132,000			End. Balance		30,955		End. Balance	725,350			End. Balance	24,000
Jan. 5		5,000
Oct. 1		80,000							Notes Payable #250				Advertising				Office Salaries
End. Balance	27,570				Accumulated Deprec.-			Beg. Balance		218,000			Expense #610				Expense #653
					Machinery #153			Annual activity	46,400			Beg. Balance	0			Beg. Balance	0
	Accounts Receivable #113			Beg. Balance		14,500		subtotal		171,600		Annual activity	14,150			Annual activity	85,000
Beg. Balance	45,540			Dec. 31 Adj		20,500		Jan. 5		60,000		End. Balance	14,150			End. Balance	85,000
Annual activity	93,020	71,560		End. Balance		35,000		End. Balance		231,600
End. Balance	67,000																Office Supplies
													Bad Debts Expense #630				Expense #655
	Allowance for				Trucks #154				Common Stock #300			Beg. Balance	0			Beg. Balance	0
	Doubtful Accounts #114			Beg. Balance	0			Beg. Balance		100,000		Annual activity	1,950			Annual activity	1,650
Beg. Balance		1,370		Jan. 5	65,000			Annual activity		40,540		End. Balance	1,950			End. Balance	1,650
Annual activity	1,320	1,950		End. Balance	65,000			End. Balance		140,540
End. Balance		2,000											Depreciation Expense -				Sales Salaries
					Accumulated Deprec.-								Machinery #620				Expense #660
	Merchandise				Trucks #155				Retained Earnings #305			Beg. Balance	0			Beg. Balance	0
	Inventory #116			Beg. Balance		0		Beg. Balance		205,200		Dec. 31 Adj	20,500			Annual activity	128,500
Beg. Balance	85,230			Dec. 31 Adj		26,000		Annual activity				End. Balance	20,500			End. Balance	128,500
Annual activity	740,670	729,150		End. Balance		26,000		End. Balance		205,200
End. Balance	96,750												Depreciation Expense -				Store Supplies
					Store Equipment #156				Dividends #310				Trucks #621				Expense #665
	Office Supplies #118			Beg. Balance	0			Beg. Balance	0			Beg. Balance	0			Beg. Balance	0
Beg. Balance	385			Oct. 1	80,000			Annual activity	12,000			Dec. 31 Adj	26,000			Annual activity	1,200
Annual activity	1,565	1,650		End. Balance	80,000			End. Balance	12,000			End. Balance	26,000			End. Balance	1,200
End. Balance	300
					Accumulated Deprec.-				Sales #400				Depreciation Expense -
	Store Supplies #119			Beg. Balance	Store Equipment #157			Beg. Balance		0			Store Equipment #622				Utilities Expense #670
Beg. Balance	250			Annual activity		0		Annual activity		1,070,050		Beg. Balance	0			Beg. Balance	0
Annual activity	1,150	1,200		Dec. 31 Adj		2,250		End. Balance		1,070,050		Dec. 31 Adj	2,250			Annual activity	17,500
End. Balance	200			End. Balance		2,250						End. Balance	2,250			End. Balance	17,500
									Sales Returns &
	Land #150				Patent #190				Allowances #410				Interest Expense #640
Beg. Balance	124,225			Beg. Balance	64,550			Beg. Balance	0			Beg. Balance	0
Annual activity				Annual activity				Annual activity	15,500			Annual activity	10,450
End. Balance	124,225			End. Balance	64,550			End. Balance	15,500			End. Balance	10,450
Beg. Bal.				Unadj.			Adj.
Debits =	562,500			Debits =	3,920,580		Debits =	1,743,595
Credits=	562,500			Credits=	3,920,580		Credits=	1,743,595
	0			0				0