Mountain, Inc., purchased a new automobile on October 1 of the 2020 at a cost of $139,000. The automobiles estimated useful life at the time of the purchase was 4 years, and its residual value was $24,000. The company reports on a calendar year basis. Prepare a complete depreciation schedule, beginning with the 2020, under each of the following methods listed (assume that the half-year convention is used).

a- Straight-line. b- 175 percent declining-balance. c- 150 percent declining-balance, switching to straight-line when that maximizes the expense. d- Which of the three methods computed in part a is most common for financial reporting purposes? Explain.

q2:

Early in 2018, Morty, Inc., was organized with authorization to issue 100,000 shares of $90 par value preferred stock and 300,000 shares of $1 par value common stock. 8,000 shares of the preferred stock were issued at par, and 90,000 shares of common stock were sold at $12 per share. The preferred stock pays a 10 percent cumulative dividend.

During the first four years of operations (2018 through 2021), the corporation earned a total of $1,950,000 and paid dividends of 40 cents per share in each year on its outstanding common stock.

Prepare the stockholders equity section of the balance sheet at December 31, 2021. Include a supporting schedule showing your computation of the amount of retained earnings reported.