Kitty Bakery purchased industrial baking ovens from Jang Appliance Manufacturing, Inc for a purchase price of $367,000, plus $10,000 in shipping costs When the ovens arrived, employees of Kitty Bakery installed the ovens in the factory at a labor cost of $20,000 Kitty also hired an electrical contractor to perform some of the electrical work needed to get the ovens set up Once the ovens were functional, Kitty ran some test bakes through the ovens, at a cost of $2,000 and installed new timers on the ovens at a cost of $1,000 Finally, Kitty began using the ovens to bake bread and other products for its customers on January 1, 2022 Required Give the journal entry that Ojha Bakery would have to make to record the acquisition of the ovens, including all relevant costs Date Accounts Dr Cr Kitty uses the double declining balance method of depreciation for its factory equipment, including ovens Kitty expects to be able to use these ovens in its factory for 10 years, at which point they expect to be able to sell them to another company Their best estimate of the value of the ovens at the end of 10 years is $45,000 Complete the following table that indicates the annual depreciation expense Year Depreciation Expense Remaining Book Value 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Suppose Kitty chose instead to use the straight line method of depreciation What would be the depreciation expense in 2022 Show your computation What would be the book value of the ovens at December 31, 2022 Show your computations How much higher or lower would Kitty income be in 2022 using the straight line method Briefly explain to someone who doesnt know anything about accounting how there could be two different measures of depreciation expense and of income for the same situation

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Posted on Aug 08, 2024

Kitty Bakery purchased industrial baking ovens from Jang Appliance Manufacturing, Inc. for a purchase price of $367,000, plus $10,000 in shipping costs. When the ovens arrived, employees of Kitty Bakery installed the ovens in the factory at a labor cost of $20,000. Kitty also hired an electrical contractor to perform some of the electrical work needed to get the ovens set up. Once the ovens were functional, Kitty ran some test bakes through the ovens, at a cost of $2,000 and installed new timers on the ovens at a cost of $1,000. Finally, Kitty began using the ovens to bake bread and other products for its customers on January 1, 2022.

Required:
Give the journal entry that Ojha Bakery would have to make to record the acquisition of the ovens, including all relevant costs.
Date

Accounts

Dr.

Cr.
Kitty uses the double-declining-balance method of depreciation for its factory equipment, including ovens. Kitty expects to be able to use these ovens in its factory for 10 years, at which point they expect to be able to sell them to another company. Their best estimate of the value of the ovens at the end of 10 years is $45,000. Complete the following table that indicates the annual depreciation expense:

Suppose Kitty chose instead to use the straight-line method of depreciation.
1. What would be the depreciation expense in 2022? Show your computation.

What would be the book value of the ovens at December 31, 2022? Show your computations.

How much higher or lower would Kitty income be in 2022 using the straight-line method.

Briefly explain to someone who doesnt know anything about accounting how there could be two different measures of depreciation expense and of income for the same situation.