Question
Coffee Cannon, a local coffee shop has the following assets on January 1, 2020. Coffee Cannon has a December 31, 2020 year-end. The company's depreciation
Coffee Cannon, a local coffee shop has the following assets on January 1, 2020. Coffee Cannon has a December 31, 2020 year-end. The company's depreciation policy is to use the straight-line method to depreciate its assets.
a. On January 1, 2020, purchase equipment costing $15,000 with an estimated life of five years. The residual value of the equipment is $0
b. On July 1, 2020, purchased couches for the lounge area of the coffee shop (furniture) costing $12,000 with an estimated life of ten years and a residual value of $2,000.
c. On January 1, 2018, Coffee Cannon purchased a car costing $25,000 with an estimated life of eight years. Coffee Cannon believes they can sell the car for $5,000 after eight years.
Required:
1. For each transaction, calculate the depreciation expense and record the journal entry on December 31, 2020.
2. Calculate the accumulated depreciation on the car as of December 31, 2020
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