Morris Inc. recorded the following transactions over the life of a plece of equipment purchased In Year 1: Jan. Dec. Sept. Dec. Jan. Dec. 1, Purchased equipment for $90,000 cash. The equipment was estimated to have a five-year life and $5,000 salvage value Year 1 and was to be depreciated using the straight-line method. 31, Recorded depreciation expense for Year 1. Year 1 3e, Undertook routine repairs costing $900. Year 2 31, Recorded depreciation expense for Year 2. Year 2 1, Made an adjustment costing $2,500 to the equipment. It improved the quality of the output but did not affect the life Year 3 and salvage value estimates. 31, Recorded depreciation expense for Year 3. Year 3 1, Incurred $850 cost to oil and clean the equipment. Year 4 31, Recorded depreciation expense for Year 4. Year 4 1, Had the equipment completely overhauled at a cost of $9,298. The overhaul was estimated to extend the total life to Year 5 seven years. The salvage value did not change. 31, Recorded depreciation expense for Year 5. Year 5 1, Received and accepted an offer of $19,000 for the equipment. Year 6 Jun. Dec. Jan. Dec. Oct. Required a. Use a horizontal statements model to show the effects of these transactions on the elements of the financial statements. The first event is recorded as an example. b. Determine the amount of depreciation expense to be reported on the Income statements for Year 1 through Year 5. c. Determine the book value (cost - accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1. Year 6. Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Use a horizontal statements model to show the effects of these transactions on the elements of the financial statements. The first event is recorded as an example. (Use + for increase, - for decrease, and leave the cell blank if the element is not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element was not affected by the transactions, leave the cell blank.) Show less MORRIS INC. Horizontal Statements Model Net = Liabilities + Equity Income Date Assets Statement of Cash Flows IA + - 111 = = Jan. 01, Year 1 Dec. 31. Year 1 Sept. 30, Year 2 Dec. 31, Year 2 Jan. 01, Year 3 Dec 31, Year 3 June 01. Year 4 Dec. 31, Year 4 Jan. 01, Year 5 Dec. 31. Year 5 Oct 01, Year 6 Oct. 01. Year 8 Required A Required B Required Required D Determine the amount of depreciation expense to be reported on the income statements for Year 1 through Year 5. (Round your answers to nearest dollar amount.) Year Depreciation Expense Year 1 Year 2 Year 3 Year 4 Year 5 Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Determine the book value (cost - accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. (Round intermediate calculations and final answers to nearest dollar amount.) Book Value Year Year 1 Year 2 Year 3 Year 4 Year 5 Required A Required B Required c Required D Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 5. (Round intermediate calculations and final answer to nearest dollar amount. Loss amount should be indicated with a minus sign.)
