The following items are taken from the adjusted trial balance of Blossom Company for the month ending July 31, 2020: Accounts payable Accounts receivable Accumulated depreciation - equipment Cash Depreciation expense Equipment Owner's capital 7/1/20 Service revenue Supplies $1,600 2,640 6,400 2,080 1,600 43,200 41,600 26,400 960
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Solved in 3 steps
- Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28February 2021.INFORMATIONThe trial balance, adjustments and additional information given below were extracted from the accounting records ofRoyal Traders on 28 February 2021, the end of the financial year.ROYAL TRADERSPRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2021Balance sheet accounts sectionCapital 301 000Drawings 134 720Vehicles at cost 360 000Equipment at cost 240 000Accumulated depreciation on vehicles 186 000Accumulated depreciation on equipment 62 000Trading inventory 140 000Debtors control 62 000Provision for bad debts 8 000Bank 42 800Cash float 1 000 Creditors control 82 800Mortgage loan: Leo Bank (18% p.a.) 160 000 Nominal accounts section Sales 1 000 000Cost of sales 480 000Sales returns 8 000Salaries and wages 178 000Bad debts 2 000Stationery 4 000Rent expense 42 880Motor expenses 34 000Bad debts recovered 2 000Telephone 14 000Electricity and water 24 000Bank charges 6 000Insurance 12…The Trial Balance TBA Limited contained the following accounts (alphabetically) at December 31, 2020, the end of company's fiscal year. Accounts .. . .. .. . .. Balances ($).... ||| .... Accounts .. . . . Balances ($) Accumulated Depreciation-Building. . 127000 .... ||| . Accumulated Depreciation-Equipment. 35000.... ||| .... Merchandise Inventory . 227000 Additional Paid in Capital-Common Stock. 229000.... ||| . ... Mortgage Loan .. . . 104000 Loss on Sale of Property . . 7310 Auditors Fee .. .. ... . .... .... ..... ..... .. 204000.... I|I .... Rent Revenue . . . . 53000 Buildings. . 401000.... ||| .... Retained Earnings 51400 ....... . u. Cash 199660 - ||| . ... Salaries and Wages Expense . . 104000 .... .... .... ........ .... ..... ... ..... ..... ..... ... Common Stock ($2 each).. III .... Sales .. . .. ... . .. .. . 1755000 **** .... .... .... .. 119000 Cost of Goods Sold . . . . 1094000 .... ||| .... Sales Returns and Allowances .. 9030 Equipment . . ... .... ... .........…Prepare an annual income statement from the following adjusted trial balance.Blossom EnterprisesAdjusted Trial Balance December 31, 2020AccountDebitCreditCash$1,900Accounts Receivable 14, 100Allowance for Doubtful Accounts$900Prepaid Insurance1, 900Equipment26, 400Accumulated Depreciation4, 600Notes Payable9, 000Accounts Payable2, 800Salaries and Wages Payable2, 000 Interest Payable100Common Stock16,000Retained Earnings7, 800Dividends2, 500Service Revenue123, 500Salaries and Wages Expense84, 700Rent Expense23, 000Supplies Expense5, 500Insurance Expense3, 000Interest Expense600Bad Debt Expense900Depreciation Expense2, 200$166, 700$166, 700
- Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year.Accounts …… …… …… …… …… …… …… Balances ($)Accumulated Depreciation-Building…. …… 125000Accumulated Depreciation-Equipment….…. 37000Additional Paid in Capital-Common Stock.. 237000Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 207000Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 407000Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 180530Common Stock ($2 each)…. …. …. …. …. ….. 105000Cost of Goods Sold …. …. …. …. ….. …. ….… 1087000Equipment …. …. …. …. …. …. ….. ….. ….. ….. 219000Interest Expense …. …. …. …. …. …. ….. ….. …. 21600Loss on Sale of Property …. …. …. …. …. …. 7520Merchandise Inventory …. …. ……. …. …. …. 226000Mortgage Loan …. …. …. …. …. …… …. …. …. 116000Rent Revenue …. …. …. …. …. …. … …. …. …. 52000Retained Earnings …. …. …. …. …… …. …. …. 51900Salaries and Wages Expense …. …. …. …. …. 106000Sales …. …. …. …. …. …. ….. ….. ……. …. …. …. 1754000Sales Returns…Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year.Accounts …… …… …… …… …… …… …… Balances ($)Accumulated Depreciation-Building…. …… 124000Accumulated Depreciation-Equipment….…. 35000Additional Paid in Capital-Common Stock.. 237000Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 203000Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 408000Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 189120Common Stock ($2 each)…. …. …. …. …. ….. 122000Cost of Goods Sold …. …. …. …. ….. …. ….… 1083000Equipment …. …. …. …. …. …. ….. ….. ….. ….. 219000Interest Expense …. …. …. …. …. …. ….. ….. …. 21500Loss on Sale of Property …. …. …. …. …. …. 7680Merchandise Inventory …. …. ……. …. …. …. 231000Mortgage Loan …. …. …. …. …. …… …. …. …. 112000Rent Revenue …. …. …. …. …. …. … …. …. …. 51000Retained Earnings …. …. …. …. …… …. …. …. 52200Salaries and Wages Expense …. …. …. …. …. 107000Sales …. …. …. …. …. …. ….. ….. ……. …. …. …. 1752000Sales Returns…The Trial Balance TBA Limited contained the following accounts (alphabetically) at December 31, 2020, the end of company's fiscal year. Accounts..... ..... ** Balances ($)....||| .... Accounts ... ........... ...... ..... Balances ($) Accumulated Depreciation-Building.... ..... 121000 . ... ||| .... Loss on Sale of Property Accumulated Depreciation-Equipment. . 36000.... ||| .... Merchandise Inventory Additional Paid in Capital-Common Stock.. 222000.... ||| - . . . Mortgage Loan.. . . **** .... .... ... 7380 231000 ............. 109000 Auditors Fee ... .... .... .... ... ... ... ..* 209000.... III.... Rent Revenue .. .... ... .... .... .. 53000 Retained Earnings .. . 52900 Buildings.. 410000.... |II - .......... ................... ............ Cash ... ......... ****** 150710.. .. |||. ... Salaries and Wages Expense 104000 Common Stock ($2 each).... ... .... .... .... ... ....... 104000....II.... Sales .... ........ .... .... .... ..... .*.* *.** 1754000 Cost of Goods Sold 1086000....…
- Prepare the income statements and balance sheets for years 2018 and 2019 for Thompson Company using the following information. The balance sheet numbers are at the end of year figures.Item20182019Accounts Payable120.0150.0Accounts Receivable150.0180.0Accumulated Depreciation330.0360.0Cash & Cash Equivalents10.012.0Common Stock150.0200.0Cost of Goods Sold750.0850.0Depreciation25.030.0Interest Expense30.033.0Inventory200.0180.0Long-term Debt150.0150.0Gross Plant & Equipment650.0780.0Retained Earnings208.5225.0Sales1,500.01,700.0SG&A Expenses500.0570.0Notes Payable51.567.0Tax Rate21%21%(2) Answer the following questions:(a) How much did Thompson Company spend in acquiring fixed assets in 2019?(b) How much dividend did Thompson Company pay out during 2019?(c) Using the end of year numbers, did the long-term solvency ratios improve or deteriorate from 2018 to 2019? Answer this question using at least two long-term solvency ratios.(d) Using the end of year numbers, did the asset…The adjusted trial balance of Palm Realtors Ltd. at December 31, 2019, appears below:Palm Realtors Ltd.Adjusted Trial BalanceDecember 31, 2019Cash $ 8,950Accounts receivable 53,530Prepaid rent 2,200Equipment 45,690Accumulated amortization $ 18,930Accounts payable 15,900Interest payable 900Salary payable 3,500Income tax payable 4,700Note payable (due 2025) 19,500Common shares 8,000Retained earnings 29,325Dividends 30,000Commissions 227,480Depreciation expense 6,260Salary expense 140,500Rent expense 26,400Interest expense 1,500Income tax expense 13,205Total $328,235 $328,235 ---Prepare in good form a statement of retained earnings of Palm Realtors Ltd. for the year endedDecember 31, 2019. --Compute the current ratio for Palm Realtors Ltd for 2019. Did the company appear to be able to meetits short-term obligations as they come due? Why?The adjusted trial balance of Palm Realtors Ltd. at December 31, 2019, appears below:Palm Realtors Ltd.Adjusted Trial BalanceDecember 31, 2019Cash $ 8,950Accounts receivable 53,530Prepaid rent 2,200Equipment 45,690Accumulated amortization $ 18,930Accounts payable 15,900Interest payable 900Salary payable 3,500Income tax payable 4,700Note payable (due 2025) 19,500Common shares 8,000Retained earnings 29,325Dividends 30,000Commissions 227,480Depreciation expense 6,260Salary expense 140,500Rent expense 26,400Interest expense 1,500Income tax expense 13,205Total $328,235 $328,235Required:1. Prepare in good form a single step statement of earnings (income statement) of Palm Realtors Ltd.for the year ended December 31, 2019.
- The adjusted trial balance of Palm Realtors Ltd. at December 31, 2019, appears below: Palm Realtors Ltd.Adjusted Trial BalanceDecember 31, 2019Cash $ 8,950Accounts receivable 53,530Prepaid rent 2,200Equipment 45,690Accumulated amortization $ 18,930Accounts payable 15,900Interest payable 900Salary payable 3,500Income tax payable 4,700Note payable (due 2025) 19,500Common shares 8,000Retained earnings 29,325Dividends 30,000Commissions 227,480Depreciation expense 6,260Salary expense 140,500Rent expense 26,400Interest expense 1,500Income tax expense 13,205Total $328,235 $328,235 Prepare in good form a classified statement of financial position for Palm Realtors Ltd as at December 31, 2019,Tibra Inc.'s trial balance TBAcontained the following accounts at December 31, 2021, the end of company's fiscal year. Accounts …… …… …… …… …… …… …… Balances ($) Accumulated Depreciation-Building…. …… 123000 Accumulated Depreciation-Equipment….…. 36000 Additional Paid in Capital-Common Stock.. 220000 Auditors Fee …. …. …. …. …. …. ….. ….. ….. .. 207000 Buildings…. …. …. …. …. …. ….. ….. ….. ….. ... 406000 Cash …. …. …. …. …. …. ….. ….. ….. ….. ….. …. 148220 Common Stock ($2 each)…. …. …. …. …. ….. 104000 Cost of Goods Sold …. …. …. …. ….. …. ….… 1086000 Equipment …. …. …. …. …. …. ….. ….. ….. ….. 202000 Interest Expense …. …. …. …. …. …. ….. ….. …. 23100 Loss on Sale of Property …. …. …. …. …. …. 7530 Merchandise Inventory …. …. ……. …. …. …. 235000 Mortgage Loan …. …. …. …. …. …… …. …. …. 102000 Rent Revenue …. …. …. …. …. …. … …. …. …. 51000 Retained Earnings …. …. …. …. …… …. …. …. 51700 Salaries and Wages Expense …. …. …. …. …. 108000 Sales …. …. …. …. …. …. ….. ….. ……. …. …. ….…Given the following account balances of MASK RIDER Co. for the year ended December 31, 2020, prepare a Statement of Financial Position using the report form. Mask Rider, capital Beg. Balance PO Contribution 30, d00 DUE ON MAY 15, 2021 Withdrawal 15, 000 Additional cortribution 5, 000 Net Income Ending Balance 57, 450 Property, Plant and Equipment P 300, 000 Accumulated Depreciation 5, 000 Accounts payable B, 110 Uneamed income 1, 395 Cash 44, 535 Prepaid rent 5, 000 Salaries payable 1, 000 Lang-term note payable 23. 000 Accounts receivable 575 Merchandise Inventory 15,345 Utilities payable 4. 00