Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Joe Heffernan decided to start a snow removal business in his neighbourhood, which he called Wildhorse Cire. He innsted his uried truck into the business

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Joe Heffernan decided to start a snow removal business in his neighbourhood, which he called Wildhorse Cire. He innsted his uried truck into the business on November 1, 2023, Joe had purchased the truck on November 1.2020, for $16,300. He looked up the fair market value of his truck on a popular web site and arrived at a value for his truck of $9,400 as of November 1, 2023. At that time, het used $3,000 from his savings account to pay for the overhaul needed in order to prepare the truck for pushing a heaw plow. Then, after investing additional cash into the business, Wildhorse Care was able to purchase, on November 5, a brand new snow plow to be attached to the truck, at a cost of $5,850. The apparatus to attach and operate the plow cost $800. In order to operate the truck on the streets, Joe was required to upgrade his driver's ficence at a cost of $1,020 per year i\$85 per month), add commercial use to his truck insurance at $1,900 per month, and purchase a $2,480 business licence that was valid for one year. Based on its seasonal operations, Joe determined that his business should depreciate the truck and plow using the units-ot-production method. When making this decision, Joe also considered the estimate of the residual values of these two assets. He believes that the truck will last another four years and be driven a total of 65,000 kilometres, at which time it could be sold for $700. In the case of the plow, estimated units of production will also be 65,000 kilometres and the residual value is expected to be $800, attec four years of use. Wildhorse Care used the truck for 2,600 kilometres in the fiscal year ended December 31,2023 and 16,200 kilometres during the What costs should Wildhorse Care use to record the investment of the truck and the purchase of the plow? Prepare the journal entries for the investment of the truck and the cash purchase of the plow. (Credit account titles are automatically indented when the amount is entered. Do not indent manuallk. If no entry is required, select "No Entry" for the account titie and enter O for the amounts. List debit entry before credit entry. Record journal entries in the order presented in the problem) Prepare a schedule for the calculation of the depreciation expense, the accumulated depreciation, and the carrying amount of Wildhorse Care's assets for the two fiscal years. (Round per kilometre cost to 2 decimal ploces, eg. 52.75 and other answers to 0 decimal places es, 5, 225.) Depreciation Schedule: Units-of-Production method 2024 Equipment 2023 2024 Attempts: 0 of 5 used

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Practical Guide To UK Accounting And Auditing Standards

Authors: Steve Collings

1st Edition

152650331X, 9781526503312

More Books

Students also viewed these Accounting questions

Question

Define Management or What is Management?

Answered: 1 week ago

Question

What do you understand by MBO?

Answered: 1 week ago