Question
Capital versus Revenue Expenditures On January 1, 2015, Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenditures have
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Capital versus Revenue Expenditures
On January 1, 2015, Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenditures have been incurred during 2017:
- The building was painted at a cost of $5,000.
- To prevent leaking, new windows were installed in the building at a cost of $10,000.
- To improve production, a new conveyor system was installed at a cost of $40,000.
- The delivery truck was repainted with a new company logo at a cost of $1,000.
- To allow better handling of large loads, a hydraulic lift system was installed on the truck at a cost of $5,000.
- The truck's engine was overhauled at a cost of $4,000.
Required:
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income Accounts ReceivableAccumulated DepreciationBuildingDepreciation ExpenseRepairs and Maintenance ExpenseNo EntryBuilding
fill in the blank e8f1bcf2e02efa6_2 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_4 fill in the blank e8f1bcf2e02efa6_5 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_7 Accounts ReceivableAccumulated DepreciationBuildingDepreciation ExpenseRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_9 fill in the blank e8f1bcf2e02efa6_10 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryCash
fill in the blank e8f1bcf2e02efa6_12 Accumulated DepreciationCashDelivery ExpenseDelivery TruckRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_14 fill in the blank e8f1bcf2e02efa6_15 Accumulated DepreciationCashDelivery ExpenseDelivery TruckRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_17 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank e8f1bcf2e02efa6_19 fill in the blank e8f1bcf2e02efa6_20 Feedback
Partially correct
Identify and analyze the total effect of the capitalized costs on January 1, 2017 related to the delivery truck.
Activity OperatingInvestingFinancingInvesting
Accounts Delivery Truck Increase, Cash IncreaseDelivery Truck Increase, Cash DecreaseDelivery Truck Decrease, Cash IncreaseDelivery Truck Decrease, Cash DecreaseDelivery Truck Increase, Cash Decrease
Statement(s) Balance SheetIncome StatementBalance Sheet and Income StatementBalance Sheet
Feedback
1. Determine activity. 1a. Financing activities are transactions (other than payment of interest) involving borrowing from creditors or repaying creditors. This also includes transactions with the company's owners. Businesses borrow money or raise money from selling of their stock. 1b. Investing activities are obtaining money by building up operations or purchasing investment products such as stocks, bonds and annuities. 1c. Operating activities are the sale of products and/or services, and the costs incurred to operate a business. 2. Determine financial statement accounts affected, balance sheet or income statement. Determine accounts and amount of increases/decreases. 3. Balance Sheet accounts: Assets = Liabilities + Stockholders' Equity. Income Statement accounts: Revenues Expenses = Net Income. (Equations must stay in balance)
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income Accounts PayableAccumulated DepreciationBuildingsDelivery TruckDepreciation ExpenseNo EntryDelivery Truck
fill in the blank 9532ca032f89fa1_2 Accumulated DepreciationCashDelivery ExpenseDelivery TruckRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_4 fill in the blank 9532ca032f89fa1_5 Accounts PayableAccumulated DepreciationBuildingsDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_7 Accumulated DepreciationCashDelivery ExpenseDelivery TruckRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_9 fill in the blank 9532ca032f89fa1_10 Accounts ReceivableAccumulated DepreciationBuildingsCashRepairs and Maintenance ExpenseNo EntryCash
fill in the blank 9532ca032f89fa1_12 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_14 fill in the blank 9532ca032f89fa1_15 Accounts PayableAccumulated DepreciationCashDelivery TruckDepreciation ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_17 Accounts ReceivableAccumulated DepreciationBuildingsCashRepairs and Maintenance ExpenseNo EntryNo Entry
fill in the blank 9532ca032f89fa1_19 fill in the blank 9532ca032f89fa1_20 Feedback
Partially correct
2. Determine the amount of depreciation for the year 2017. The company uses the straight-line method and depreciates the building over 25 years and the truck over six years. Assume zero residual value for all assets. Round your intermediate calculations and answers to the nearest whole dollar.
Asset 2017 Depreciation Building $fill in the blank 5883ddfabffaf9d_1 Truck $fill in the blank 5883ddfabffaf9d_2 Feedback
Calculate depreciation for the appropriate assets. Set up T account for accumulated depreciation. Determine book value at end of 2017. Record depreciation by increasing the expense account.
Activity OperatingInvestingFinancingOperating
Accounts Depreciation Expense Increase, Accumulated Depreciation - Building Decrease, Accumulated Depreciation - Delivery Truck DecreaseDepreciation Expense Increase, Accumulated Depreciation - Building Decrease, Accumulated Depreciation - Delivery Truck IncreaseDepreciation Expense Increase, Accumulated Depreciation - Building Increase, Accumulated Depreciation - Delivery Truck DecreaseDepreciation Expense Increase, Accumulated Depreciation - Building Increase, Accumulated Depreciation - Delivery Truck IncreaseDepreciation Expense Increase, Accumulated Depreciation - Building Increase, Accumulated Depreciation - Delivery Truck Increase
Statement(s) Balance SheetIncome StatementBalance Sheet and Income StatementBalance Sheet and Income Statement
Feedback
Calculate depreciation the appropriate assets. Set up T account for accumulated depreciation. Determine book value at end of 2017. Record depreciation by increasing the expense account.
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues Expenses = Income Accumulated Depreciation-BuildingBuildingCashDepreciation ExpenseTruck ExpenseNo EntryAccumulated Depreciation-Building
fill in the blank 80a02f0b7fe5ffa_2 Accumulated DepreciationCashDepreciation ExpenseTruck ExpenseNotes PayableNo EntryNo Entry
fill in the blank 80a02f0b7fe5ffa_4 fill in the blank 80a02f0b7fe5ffa_5 Accumulated Depreciation-BuildingBuildingCashDepreciation ExpenseTruck ExpenseNo EntryNo Entry
fill in the blank 80a02f0b7fe5ffa_7 Accumulated DepreciationCashDepreciation ExpenseTruck ExpenseNotes PayableNo EntryDepreciation Expense
fill in the blank 80a02f0b7fe5ffa_9 fill in the blank 80a02f0b7fe5ffa_10 Accumulated Depreciation-Delivery TruckBuildingCashDepreciation ExpenseTruckNo EntryAccumulated Depreciation-Delivery Truck
fill in the blank 80a02f0b7fe5ffa_12 Accumulated Depreciation-BuildingBuildingCashTruck ExpenseNotes PayableNo EntryNo Entry
fill in the blank 80a02f0b7fe5ffa_14 fill in the blank 80a02f0b7fe5ffa_15 Accumulated Depreciation-BuildingBuildingCashTruck ExpenseNotes PayableNo EntryNo Entry
fill in the blank 80a02f0b7fe5ffa_17 Accumulated Depreciation-Delivery TruckBuildingDepreciation ExpenseNotes PayableTruckNo EntryDepreciation Expense
fill in the blank 80a02f0b7fe5ffa_19 fill in the blank 80a02f0b7fe5ffa_20 Feedback
Partially correct
3. Prepare a partial Balance Sheet to show how would the assets appear December 31, 2017.
Jose Company Balance Sheet (Partial) December 31, 2017 BuildingCashDelivery truck expenseDepreciation expenseLandBuilding
$Building Accumulated depreciationCashBuildingDelivery TruckDepreciation expenseAccumulated depreciation
Accumulated depreciation $Accumulated depreciation Building expenseCashDelivery truckDelivery truck expenseDepreciation expenseDelivery truck
$Delivery truck Accumulated depreciationBuildingCashDelivery TruckDepreciation expenseAccumulated depreciation
Accumulated depreciation Accumulated depreciation Total property, plant, and equipment $fill in the blank 29c8acf97fe0074_11 Feedback
In which section of the Balance Sheet are these assets are listed? Asset accounts with accumulated depreciation are listed together.
Feedback
Partially correct
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The Brazilian Economy Confronting Structural Challenges
Authors: Edmund Amann
1st Edition
0367245272, 9780367245276
