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What is the gain or loss on the sale

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Reference no: EM133078388

Question 1 - Jazz Manufacturing Limited purchased a new vehicle on January 1, 2019 for $80,000. The vehicle has a useful life of 5 years or 125,000km and management estimates they will be able to sell it for $15,000 at the end of its useful life. The vehicle was driven 25,000 km in 2019, 20,000 km in 2020, 24,000 km in 2021 and 26,000 km in 2022.

Required -

1. Calculate the depreciation expense for 2019, 2020, 2021 & 2022 using

1. straight line method

2. Units of production method and

3. Double-declining balance method

2. Assume that Jazz Manufacturing sold the vehicle on January 1, 2022 for $45,000. What is the gain or loss on the sale?

3. Prepare the journal entry to record the sale of the vehicle on January 1, 2022.

Question 2 - The following information has been gathered to assist you in deciding whether to invest in Socks & Gizmo Limited.

Additional information:

Dividends declared & paid in 2021 $50,000

Number of shares outstanding at October 31, 2021 10,000

Market price per share at October 31, 2021 $20.00

Selected Data from the October 31, 2020 financial statements:

Accounts receivable, net 31,500

Inventory 44,000

Total assets 328,500

Accounts payable 32,600

Total shareholder's equity 167,200

 

Industry averages -2021

Socks & Gizmo Limited 2020

Gross profit margin ratio

55.00%

62.00%

Return on sales (net profit margin)

9%

10.00%

Return on total assets

26%

24%

Debt ratio

0.45

0.4

Current ratio

1.5

2

Asset turnover

2.1

2

Quick Ratio

1

1.1

Earnings per share

10

5

Dividend Yield

0.3

0.2

Required -

1. Calculate 12 ratios for the year ended October 31, 2021 for Socks & Gizmo Limited using the ratio sheet provided in Moodle. You may calculate any 12 you wish.

2. Discuss 4 ratios calculated in part 1.

3. Based on the ratios you discussed in Part 2 would you be willing to invest in Socks & Gizmo Limited? Why or why not?

Reference no: EM133078388

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