Reference no: EM132671920
Question - Mean Beans, a local coffee shop, has the following assets on January 1, 2020. Mean Beans prepares annual financial statements and has a December 31, 2020 year-end. The company's depreciation policy is to use the straight-line method to depreciate its assets.
1. On January 1, 2020, purchase equipment costing $20,200 with an estimated life of five years. Mean Beans will scrap the equipment after five years for $0.
2. On July 1, 2020, purchase furniture (tables and chairs) costing $21,500 with an estimated life of ten years. Mean Beans estimates that it can sell the furniture for $4,900 after ten years.
3. On January 1, 2018, Mean Beans had purchased a car costing $19,250 with an estimated life of eight years. Mean Beans estimates that it can sell the car for $3,850 after eight years.
Required -
1-a. For each transaction, calculate the current year annual depreciation expense.
1-b. For each transaction, record the adjusting entry on December 31, 2020.
2. For the car, determine the accumulated depreciation as of December 31, 2020.
3. For the car, determine the book value as of December 31, 2020.
Transaction list for 1b
1. Record annual depreciation on equipment.
2. Record annual depreciation on Furniture.
3. Record annual depreciation on a Car.
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