Prepare a partial balance sheet for withers on december

Assignment Help Financial Accounting

Reference no: EM13183294

Brad Jolie recently decided to open a restaraunt specializing in New Orleans cuisine. He purchased a restaraunt building on January 2, 2009, at a cost of $650,000, paying 10 percent of the purchase price in cash and signing a note for the balance. The building has an estimated useful life of 25 years and an estimated salvage value of $150,000. Also on January 2, 2009, Jolie paid cash of $80,000 for used kitchen equipment with an estimated four-year useful life and $8,000 salvage value.

a. Prepare the journal entries to record the purchase of the building and the kitchen equipment.

b. Compute depreciation expense for 2009 and 2010 on the restaraunt using the following methods:

(1) Straight line

(2) Double-declining balance

c. Prepare the year-end adjusting journal entries to record the depreciation expense amounts computed in part (a)

Comprehensive Problem

A partial balance sheet is presented for Withers Industries

Partial Balance Sheet

December 31, 2008

Property, Plant & Equipment

Delivery Truck $35,000

Less Accumulated Depreciation (18,750) 16,250

Office Equipment $45,000

Less Accumulated Depreciation (35,280)9,720

Factory Machinery$100,000

Less Accumulated Depreciation (36,800) 63,200

Total Property, Plant, & Equipment$89,170

Intangible Assets

Patents $7,000

Notes

The delivery truck was purchased on June 30, 2006, and is being depreciated over four years usingthe straight-line method. Salvage value wasestimated at $5,000.

The office equipment was purchased on January 2, 2006, and isbeing depreciated over five years using the double-declining balance method. Salvage was estimated at $4,000.

The factory machinery was purchased onJanuary 2, 2005, and is being depreciated over ten years using the straight-line method. Salvage value was estimated at $8,000.

The remaining useful life on the patent is seven years.

(a) On July 31, 2009, Withers sold the delivery truck for $9,000 cash. Prepare any necessary journal entries to record this sale.

(b) OnDecember 1, 2009, Withers purchased land and a building for a combined cost of $400,000 by paying $100,000 cash and signing a note for the balance. An appraiser estimates the values of the building and land are, respectively, $302,500 and $247,500. Withers plans to use the building for ten years, atwhich time the building will probably be worth $50,000. Withers plans to use straight-line depreciation on the building. Journalize this purchase.

(d) Prepare a partial balance sheet for Withers on December 31, 2009.

Reference no: EM13183294

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