What is the book value of the

Question

1. Covey Company purchased a machine on January 2, 2008, by paying cash of $350,000. The machine has an estimated useful life of five years (or the production of 600,000 units) and an estimated residual value of $35,000.

Required:

Determine depreciation expense (to the nearest dollar) for each year of the machine's useful life under (a). straight-line depreciation; and (b). the declining balance method with a 200% acceleration rate.

What is the book value of the machine after three years with the declining- balance method and a 200% acceleration rate?

What is the book value of the machinery after three years with straight-line depreciation?

4. If the machine was used to produce and sell 130,000 units in 2008, what would the depreciation expense be under the units of production method?

2. Moore Company has the following partial list of account balances at year end:

Accounts payable		$    1,800
Accounts receivable		1,600
Bonds payable (due in 5 years)		80,000
Cash		4,000
Equipment (net)		10,000
Land		25,000
Notes payable (due in 6 months)		1,200
Salaries payable		800
Cost of Goods Sold		3,200

Required:

A. Compute the current ratio.

B. Determine the amount of working capital.

C. Assume that cash is used to pay the balance due on accounts payable.

1. Compute the new current ratio.

2. Compute the new amount of working capital.

D. Compute the payable turnover (round to one decimal).

3. Border Company purchased a truck that cost $18,000. The company signed a $18,000 note payable that specified four equal annual payments (at each year-end), each of which includes a payment on the principal and interest on the unpaid balance at 10% per annum.

Required:

A. Compute the amount of each equal payment (round to the nearest dollar).

B. Give the entry to record the purchase of the truck.

C. Give the entry to record the first annual payment on the note.

D. Will the interest paid with the first annual payment be more or less than the interest paid with the second annual payment? Explain your answer.

Answer 1

By applying the concepts and theories of accounting basics, solve and simplify each part of the question and provide answer to all of the questions illustrated below. The Border Company purchased a truck which cost $18,000. The company signed an $18,000 note payable that specified 4 equivalent yearly payments (at every year-end), each of which comprises a payment on the principal and interest on the unpaid balance at 10% per annum. Q1. Calculate the amount of each and every equivalent payment (round to the nearby dollar). Q2. Provide the entry to record the purchase of truck. Q3. Provide the entry to record the first yearly payment on the note. Q4. Will the interest paid by the first yearly payment be more or less than the interest paid with the second yearly payment? Describe your answer.