Cost and DepreciationOn January 1, 2019, Quick Stop, a convenience store, purchased a new soft-drink cooler. Quick Stop paid $23,000 cash for the cooler. Quick Stop also paid $730 to have the cooler shipped to its location. After the new cooler arrived, Quick Stop paid $2,410 to have the old cooler dismantled and removed. Quick Stop also paid $820 to a contractor to have new wiring and drains installed for the new cooler. Quick Stop estimated that the cooler would have a useful life of 6 years and a residual value of $200. Quick Stop uses the straight-line method of depreciation.1. Prepare any necessary journal entries to record the cost of the cooler.Jan. 1 fill in the blank b1e8c7fa4fc3fac_2 fill in the blank b1e8c7fa4fc3fac_4 (Record purchase of equipment) 2. Prepare the adjusting entry to record 2019 depreciation expense on the new cooler.Dec. 31 fill in the blank b95aef08e003ff9_2 fill in the blank b95aef08e003ff9_4 (Record straight-line depreciation) 3. What is the book value of the cooler at the end of 2019?$fill in the blank 03199cfca044fd0_14. Conceptual Connection: If Quick Stop had used a useful life of 10 years and a residual value of $1,500, how would this effect depreciation expense for 2019 and the book value of the cooler at the end of 2019?Depreciation expense for 2019$fill in the blank 03199cfca044fd0_2Book value of the cooler at the end of 2019$fill in the blank 03199cfca044fd0_3

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SWFT Essntl Tax Individ/Bus Entities 2020

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Author:Nellen

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Chapter17: Business Tax Credits And The Alternative Minimum Tax

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Cost and Depreciation

On January 1, 2019, Quick Stop, a convenience store, purchased a new soft-drink cooler. Quick Stop paid $23,000 cash for the cooler. Quick Stop also paid $730 to have the cooler shipped to its location. After the new cooler arrived, Quick Stop paid $2,410 to have the old cooler dismantled and removed. Quick Stop also paid $820 to a contractor to have new wiring and drains installed for the new cooler. Quick Stop estimated that the cooler would have a useful life of 6 years and a residual value of $200. Quick Stop uses the straight-line method of depreciation.

1. Prepare any necessary journal entries to record the cost of the cooler.

Jan. 1		fill in the blank b1e8c7fa4fc3fac_2
			fill in the blank b1e8c7fa4fc3fac_4
	(Record purchase of equipment)

2. Prepare the adjusting entry to record 2019 depreciation expense on the new cooler.

Dec. 31		fill in the blank b95aef08e003ff9_2
			fill in the blank b95aef08e003ff9_4
	(Record straight-line depreciation)

3. What is the book value of the cooler at the end of 2019?
$fill in the blank 03199cfca044fd0_1

4. Conceptual Connection: If Quick Stop had used a useful life of 10 years and a residual value of $1,500, how would this effect depreciation expense for 2019 and the book value of the cooler at the end of 2019?

Depreciation expense for 2019	$fill in the blank 03199cfca044fd0_2
Book value of the cooler at the end of 2019	$fill in the blank 03199cfca044fd0_3

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