At December 31, 2019, Swifty Corporation reported the following as plant assets.Land $3,980,000
Buildings $28,210,000
Less: Accumulated depreciation-buildings 13,200,000 15,010,000
Equipment 48,670,000
Less: Accumulated depreciation-equipment 4,980,000 43,690,000
Total plant assets $62,680,000
During 2020, the following selected cash transaction occurred.
April 1 Purchased land for $2,200,000
May 1 Sold equipment that cost $840,000 when purchased on January 1, 2016. The equipment was sold for $504,000
June 1 Sold land purchased on June 1, 2010 for $1,450,000. The land cost $399,000
July 1 Purchased equipment for $2,480,000
Dec. 31 Retired equipment that cost $491,000 when purchased on December 31,2010. The company received no proceeds related to salvage.
-Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
-Record adjusting entries for depreciation for 2020. Credit account titles are automatically indented when the amount presented in the problem. If no entry is required, select "No Entry for the account titles and enter 0.
Answers
Answer:
April 01 2020
Land Debit $ 2,200,000
Cash Credit $2,200,000
To record purchase of land
May 01 2020
Cash Debit $ 504,000
Allowance for depreciation equipment Debit $ 363,720
Equipment Credit $ 840,000
Gain on sale of equipment Credit $ 27,720
To record sale of equipment and to recognise gain on sale
June 01 2020
Cash Debit $ 1,450,000
Land Credit $ 399,000
Gain in sale of land Credit $1,051,000
To record sale of land and gain on the sale
July 01 2020
Equipment Debit $ 2,480,000
Cash Credit $ 2,480,000
To record purchase of equipment
December 31 2020
Allowance for depreciation Debit $ 491,000
Equipment Credit $ 491,000
To record retirement of equipment
The adjusting entry for depreciation is as follows:
December 31 2020
Depreciation expense - Equipment Debit $ 4,985,000
Depreciation expense - Buildings Debit $ 578,200
Allowance for depreciation - Equipment Credit $ 4,985,000
Allowance for depreciation - Buildings Credit $ 578,200
Explanation:
Computation for Depreciation expense for the year
Equipment Jan 01 2020 $ 48,670,000 for 4 months @ 10 %
Sales - May 01 2020 $( 840,000)
Adjusted balance May 01 2020 $ 47,830,000 for 2 months @ 10 %
Purchases July 01 2020 $ 2,480,000
Adjusted balance July 01 2020 $ 50,310,000 for 6 months @ 10 %
Depreciation expense for 4 months = $ 48,670,000*10 % *4/12 = $1,622,333
Depreciation expense for 2 months = $ 47,830,000*10 % *2/12 = $ 797,167
Depreciation expense for 6 months = $ 51,310,000*10 % *6/12 =$ 2,565,500
Total depreciation equipment $ 4,985,000
Depreciation on buildings $ 28,910,000 * 2 % $ 578,200
Depreciation has to be recorded for full year on assets retired on December 31 2020
Computation of gain and loss on sale of equipment
Cost of equipment purchased on January 1 2016 $ 840,000
Depreciation rate 10 %
Equipment sold on May 01 2020
Depreciation charged for 4 years and 3 months @ 10 %
$ 840,000 * 4.33 *10 % $ 363,720
Net book value of equipment disposed on May 01 2020 $ 476,280
Sale value of equipment $ 504,000
Gain on sale of equipment $ (27,720 )
The gain on sale of land is the difference between the cost and sales proceeds since land is not depreciated
Sale proceeds - Cost = $ 1,450,000 - $ 399,000 = $ 1,051,000
The assets that was retired on Dec 31 2020 was purchased on December 31 2010 and was considered for depreciation for 10 years and was fully depreciated and had ni book value on the date of retirement
Related Questions
Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2018, its balance for Accounts Receivable is $35,000. The company estimates that of this amount, $4,000 is not likely to be collected in 2019. In 2019, the actual amount of bad debts is $2,900. Record, if necessary, an adjustment for estimated uncollectible accounts at the end of 2018 and the actual bad debts in 2019.
A state government reported a $9,000 increase in net position in the motor pool internal service fund, a $12,000 increase in net position in the water enterprise fund, and a $7,000 increase in the employee pension fund. The motor pool internal service fund provides service primarily to the police department. What amount should the city report as the change in net position for business-type activities in its statement of activities?
The current exchange rate of dollars to euros is $18/€11.The risk free rate for dollars is r = 3%. The risk free rate for euros is re = 4%. The dollar denominated price of an option to purchase €22 for $32 in six months is $5.09. Determine the euro denominated price of a put option to sell $22 in six months using the given strike. (Hint: the strike comes from the statement €22 for $32.)
A firm has cash of 200,000, accounts receivable of 75,000, prepaid expenses of 12,500, accounts payable of $50,000, other current liabilities of 35,000, common stock of 375,000 and long term liabilities of 65,000. The firm also produced a profit of 20,000 during the last calendar year. What is the firm working capital?
Answers
Answers
Answer:
Originally pay for the stock = $8
Explanation:
Given:
Total return = 62.5%
Value of stock (after 1 year) = $12
Dividend during the year = $1
Originally pay for the stock = ?
Computation:
Originally pay for the stock = $8
Answers
Answer:
After each purchase
Explanation:
perpetual inventory system can be regarded as a kind of inventory management that utilize technology in the documentation of real-time transactions whenever stock is received or sold, this method is reliable and the efficiency is high compare to
periodic inventory system. It should be noted that When using a perpetual inventory system and the weighted-average inventory costing method, a new weighted-average cost per unit is computed after each purchase. perpetual inventory system can be use by gocesory stores.
Answers
Answer:
A gain from the sale of used equipment for cash should be subtracted from net income
Explanation:
Indirect method make adjustment to reconcile the net income to cash. It depends on the account if it is added or subtracted to net income.
In this case, a gain from the sale of used equipment for cash is subtracted from net income.
Answers
Answer:
Calculate the tax consequence of withdrawal from retirement account.
T and L are 40 years old and decide to withdraw $2,100 from their IRA. They lie in a 35% marginal tax bracket.
Analysis
They are withdrawing some amount from their retirement fund. They have to pay the tax and penalty for early withdrawals from the retirement fund. The withdrawal amount is $2,100 so they have to pay tax on it. The tax rate will be 35% which is their marginal tax bracket.
Calculation of tax consequences if withdrawal amount is $2,100:
Ordinary income tax amount calculates by multiplying the withdrawal amount with the ordinary tax rate.
= $2100 × 35%
= $735
The withdrawal amount attracts the 10% penalty. So, the penalty amount is calculated as follows: Penalty on withdrawn funds calculates by multiplying the withdrawn funds with the percentage of penalty.
= $2100 × 10%
= $210
(NOTE: - T and L have to pay ordinary income tax along with the penalty on their withdrawal because they are withdrawing funds from their IRA before age 59.5.)
Total expenses include the tax amount and penalty charge on withdrawal amount. So, it is calculated as follows:
Total expenses =$735 + $210
Total expenses = $945
Conclusion
Therefore, T and L would incur a tax of $945 on their withdrawal. This $945 is the sum of income tax amount and penalty on withdrawal balance.
Period Demand F1 F2
1 68 63 66
2 75 70 67
3 70 75 70
4 74 69 72
5 69 70 73
6 72 68 75
7 80 70 77
8 78 74 84
Required:
Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate
Answers
Answer:
Kindly check explanation
Explanation:
Given the data:
Period Demand F1 F2
1 68 63 66
2 75 70 67
3 70 75 70
4 74 69 72
5 69 70 73
6 72 68 75
7 80 70 77
8 78 74 84
Mean absolute deviation (MAD) for F1:
P___Demand(D) __F1__F2___|D - F1|___|D-F2|
1____ 68 _______63 __66____5______ 2
2____75_______ 70__ 67____ 5______ 8
3____70_______ 75__ 70____ 5______ 0
4____74_______ 69__ 72____ 5______ 2
5____69_______ 70__ 73____ 1______ 4
6____72_______ 68__ 75____ 4______3
7____80_______ 70__ 77____ 10 _____3
8____78_______ 74__ 84____ 4______6
Mean absolute deviation (MAD) For F1 :
Σ(|D - F1|)/n :
(5 + 5 + 5 + 5 + 1 + 4 + 10 + 4) / 8
= 39 / 8
= 4.875
Mean absolute deviation (MAD) For F2 :
Σ(|D - F2|)/n :
(2 + 8 + 0 + 2 + 4 + 3 + 3 + 6) / 8
= 28 / 8
= 3.50
F2 seems to be more accurate has it has a Lower MAD value
Final answer:
To determine which forecast is more accurate between F1 and F2, the Mean Absolute Deviation (MAD) for each was calculated. It was found that Forecast F2, with a lower MAD of 3.75 compared to F1's 5.25, is the more accurate forecast.
Explanation:
The subject of this examination pertains to a field in mathematics known as forecasting. The Mean Absolute Deviation (MAD) is a commonly used method to measure the accuracy of forecast predictions. It is computed by taking the absolute value of the actual demand minus the forecasted demand, and then finding the average of these absolute differences over a specific period.
For F1: |68-63| + |75-70| + |70-75| + |74-69| + |69-70| + |72-68| + |80-70| + |78-74|. When you calculate these absolute differences and then divide the sum by 8 (number of periods), you get a MAD of 5.25.
For F2: |68-66| + |75-67| + |70-70| + |74-72| + |69-73| + |72-75| + |80-77| + |78-84|. Similarly, calculate these absolute differences and divide the sum by 8, you get a MAD of 3.75.
Given the results, the F2 forecast appears to be more accurate as it has a smaller MAD.
Learn more about Forecast Accuracy here:
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