Depreciation Methods: *P9-8A Jayme Company had purchased three machines. Because of frequent employee turnover, a different accountant selected the depreciation method for each machine.

Instructions: Compute the amount of accumulated depreciation on each machine at December 31, 2018.

Machine 1) Compute accumulated depreciation at December 31, 2018 under the straight-line method. Machine 1 was acquired on Jan 1, 2015 at a cost of $96,000, salvage value of $12,000, 8-year useful life.

Depre. Exp. = cost salvage value* (time in service)

useful life

2015 Depreciation: $84,000* X 1/8 = $57,600

2016 Depreciation: $84,000* X 1/8 = $23,040

2017 Depreciation: $84,000* X 1/8 = $38,400

2018 Depreciation: $84,000* X 1/8 = $24,000

Accumulated depreciation at December 31, 2018: $_____________

Machine 2) Compute accumulated depreciation at December 31, 2018 under the double declining method. For the decliningbalance method, Jayme Company uses the doubledeclining rate. Machine 2 was acquired on July 1, 2016 at a cost of $85,000, salvage value of $10,000, 5-year useful life.

Double Declining Rate= _____1_______* (2) = ________________

useful life

Depre. Exp. = Beginning of the Year Book Value * (Double Declining Rate) * (time in service)

Double Declining Rate Calculation:

Year	Beg. Of Year Book Value*	Depre. Rate *	Time in Service=	Depre. Exp.	Accum. Depre.	Ending Book Value
	(from prior year ending)	(calculate)	(use months)	(compute)	(add prior Depre. exp.)	(BV- depreciation)
	a	b	c	a*b*c = d	e	(a-d) = f
2016	96,000	8
2017
2018

Accumulated depreciation at December 31, 2018: $______________

Machine 3) Compute accumulated depreciation at December 31, 2018 under the units of activity method. Machine 3 was acquired on Nov. 1, 2016 at a cost of $66,000, salvage value of $6,000, 6-year useful life.

Deprec. Cost per Unit Rate= _Cost Salvage Value

Estimated Usage

Depre. Exp. = Actual Usage * Deprec. Cost per Unit Rate

2016 Depreciation: 800 actual hours _ * $_______ = $_____________

2017 Depreciation: 4,500 actual hours * $_______ = $_____________

2018 Depreciation: 6,000 actual hours * $______ = $_____________

Accumulated depreciation at December 31, 2018 is: $_____________

Depreciation Methods: *P9-9A Megan Corporation purchased machinery on January 1, 2017, at a cost of $250,000, with an estimated useful life of 4 years, and estimated salvage value of $30,000. The company is comparing different depreciation methods.

A) Compute depreciation expense under the straight-line method:

Depre. Exp. = cost salvage value* (time in service)

useful life

Year 1 Depreciation Expense:

Year 2 Depreciation Expense:

B) Compute depreciation expense under the double declining method:

Double Declining Rate= _____1_______* (2) = ________________

useful life

Depre. Exp. = Beginning of the Year Book Value * (Double Declining Rate) * (time in service)

Year	Beg. Of Year Book Value*	Depre. Rate *	Time in Service=	Depre. Exp.	Accum. Depre.	Ending Book Value
	(from prior year ending)	(calculate)	(use months)	(compute)	(add prior Depre. exp.)	(Beg BV- accum. depre.)
	a	b	c	a*b*c = d	e	(a-d) = f
Year 1
Year 2

Year 1 Depreciation Expense: $_____________

Year 2 Depreciation Expense: $_____________

Fixed Asset Disposals: P9-3A Pine Company uses straightline depreciation and had the following assets on January 1, 2017. Depreciation was up to date as of December 31, 2016.

Item		Cost	Purchase Date	Useful Life	Salvage Value
Machinery		$71,000	Jan. 1, 2007	10 years	$0
Forklift		30,000	Jan. 1, 2014	5 years	$0
Truck		33,400	Jan. 1, 2012	8 years	$3,000

AaBbCcDdE AaBbCcDdE | AaBbCcDc AaE No Spacing Heading 1 Normal Instructions: For each company, calculate return on assets, profit margin, and asset turnover (both companies use the straight-line approach) and comment on the effectiveness Blythe Jacke Corp. Net Income $ 240,000 $ 300,000 Sales revenue 1,150,000 1,200,000 Total assets (average) 3,200,000 3,000,000 Plant assets average) 2,400,000 1,800,000 Intangible assets (goodwill 300,000 a) Computations: Blythe Return on assets: Jacke Return on assets: Blythe Profit margin: Jacke Profit margin: Blythe Asset turnover: Jacke Asset Turnover: (b) Based on your calculations, comment on the relative effectiveness of the two companies in using their assets to generate sales. Ratios: Brief Exercise 9-10: Suppose in its 2017 annual report that McDonald's Corporation reports beginning total assets of $28.46 billion, ending total assets of $30.22 billion, net sales of $22.74 billion, and net income of $4.55 billion. A) Compute return on assets: B) Compute asset turnover: Instructions: Journalize all entries for the disposal of the assets in 2017. a) The Machinery was retired on January 1, 2017 Calculate Accumulated Depreciation prior to retirement: Record the journal entry for the retirement of the Machinery Date TACCOUnts Debit 1117 b) The Forklift was sold on June 30, 2017 for $12,000. Calculate Depreciation Expense for 2017 prior to the sale: The journal entry to update the Depreciation Expense for the year is: Date Accounts Debit 6730117 Calculate Total Accumulated Depreciation on the Forklift: The journal entry to record the sale of the Forklift is: Date Accounts Debit 6/30/17 Credit Gain on Disposal of Plant Asset $3,00 c) The Truck was discarded on December 31, 2017 Calculate Depreciation Expense for 2017. prior to discarding: The journal entry to update the Depreciation Expense for the year is: Date Accounts Debit Calculate Total Accumulated Depreciation on the Forklift: The Journal entry to record the Disposal of the Truck is: Date Accounts Debit 6/30/17 Credit Fixed Asset Ratios: P9-7A Blythe Corporation and Jacke Corporation report the following financial information Mailings Review AaBbCcDdE AaBbCcDdE No Spacing AaBbCcDc AaBbCcDdEt Heading 1 Heading 2 Normal Liabilities Class Example (refer to Chapter 10 Preview Slides) CC Coffee and Cookies Co. started operations in 2018. 1) On May 1, 2018, the Company purchased (on account) Coffee Machine for $1,300 and Mocer for $650. The journal entry to record the purchases is: Date Accounts Debit Credit 5/1/18 2) On May 2, 2018, the Company purchased $600 of raw materials ingredients (on account) The journal entry to record the purchases is: Date Accounts Debit Credit 5/2/18 3) On May 11, CC Coffee and Cookies Co. receives cash from selling 300 cookies at $2 each. The cost for making each cookie is $1. (Assume 8% sales tax rate) The journal entry on May 11 to record the sale, including sales taxis: Date Accounts Debit Credit 5/11/18 4) On May 18, CC Coffee and Cookies Co. has a customer that pays cash in advance for a custom cookie order of 50 cookies at $2 each. (Assume 8% sales tax rate) 25 cookies to be picked up May 25 25 cookies to be picked up June 1 The journal entry to record the unearned revenue is: Date Accounts Credit 5/18/18 Debit 5) On May 25, CC Coffee and Cookies Co. provides 25 custom cookies to the customer that paid in advance. The cost for making each cookie is $1. The journal entry to record the revenue that is now eamed is Date Debit Credit Accounts 5/25/18 Debit Credit revenue that is now oamed is: Date Accounts 5/25/18 6) Assume CC Coffee and Cookies pays the only employee on Fridays, every other week. The employee works 25 hours a week at $10/hour. The Amount Earned for 2 weeks is: $ What Payroll taxes does the employee pay? What Payroll taxes does a company pay? The Payroll Journal entry on May 25 (use numbers from class slide): Date Accounts Debit 5/25/18 Credit 7) The journal entry to record Payroll on May 25 is: Date Accounts 5/25/18 Debit Credit 8) The journal entry to record the month end salaries)wages payable is: Salaries and Wages Payable - Avg. Daily Salaries or Wages # of days Date Accounts Debit Credit 5/31/18