Question I (30 marks) Malibu Co. purchased a machine on October 08, 2019, for $2,500,000. Required Using the table below, calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 50,000 hours with a residual value of $150,000). During the machine's life, it was used 15,000; 14,000; 10,000; 9,000; and 6,000 hours. Year Straight Line Units of Declining Production Balance Question II (24 marks) Wasson Corp had the following items in its unadjusted trial balance at December 31: Debit Credit Sales, cash $88,000 Sales, credit 120,000 Accounts receivable $96,000 1,000 Allowance for doubtful accounts Required Prepare the adjusting entry to estimate bad debts under each of the following independent situations. a. Bad debts are estimated to be 8% of credit sales. b. An analysis shows that 8% of outstanding accounts receivable will not be collected. C. Prepare a current asset section of the balance sheet under the (a) and then (b) assumptions. Question III (16 marks) Stryker Company accepted a $10,000, 8%, 90-day note dated May 16, from Cariboo Corp. as an extension on its past-due account. Required Prepare the necessary general journal entries in Stryker Company's books on May 16 and maturity date, for each of the following independent assumptions: a. Note was held until maturity and collected on time b. Note was dishonoured. Amount of note and interest were written off as uncollectible. Stryker uses the allowance method to account for bad debts Question IV {10 marks) Last Resort Builders (LRB) exchanged a three-year-old excavator for a new excavator that had a list price of $160,000. The old excavator originally cost $175,000 and had accumulated depreciation of $45,000 to the date of exchange. In addition to the $145,000 trade-in given for the old excavator (which was the old asset's fair value), LRB paid $10,000 cash to complete the deal. The list price for the new excavator is considered unreliable. Required Record the asset exchange. Question V {20 marks} The following information is available to Fife Friends Company to prepare its bank reconciliation at the end of March, 2020: March 31 general ledger Cash account balance is $11,846 March 31 cash balance on the bank statement is $16,169. The company recorded a $5,468 cheque in payment of an account payable as $4,586 The bank charged the company $45 for monthly standard service A review of cashed cheques returned by the bank statement indicated that cheques amounting to $3,595 had not been cashed by March 31 The credit memo enclosed with the bank statement showed that the bank collected a $4,250 note plus interest of $125 on behalf of the company The debit memo included with the bank statement listed a non- sufficient funds cheque for $1,758 plus a $25 processing fee as a result of a non-payment from its customer, Bonnet. The bank charged the company $37 for printing a book of cheques The bank recorded a deposit of $7,600 as a deposit of $6,700. Required Prepare a bank reconciliation statement for Fife Friends Company at March 31, 2020
