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Accounting Homework

1. Strike Bowling installs automatic scorekeeping equipment with an invoice cost of $180,000. The electrical work required for the installation costs $8,000. Additional costs are $3,000 for delivery and $12, 600 for sales tax. During the installation, a component of the equipment is carelessly left on a lane and hit by the automatic lane-cleaning machine. The cost of repairing the component is $2,250. What is the total recorded cost of the automatic scorekeeping equipment?

2. On January 2, 2011, the Crossover Band acquires sound equipment for concert performances at a cost of $55,900. The band estimates it will use this equipment for four years, during which time it anticipates performing about 120 concerts. It estimates that after four years it can sell the equipment for $1,900. During year 2011, the band performs 40 concerts. Compute the year 2011 depreciation using the straight-line method.

3. Refer to the information in question #2. Compute the year 2011 depreciation using the units-of-production method.

4. A fleet of refrigerated delivery trucks is acquired on January 5, 2011, at a cost of $930,000 with an estimated useful life of eight years and an estimated salvage value of $150,000. Compute the depreciation expense for the first three years using the double-declining-balance method.

5. In recent years Singh Company has purchased five machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

Compute depreciation under

different methods.

Salvage Useful Life

Machine Acquired Cost Value (in years) Depreciation Method

1 July 1, 2008 $68,000 $5,000 7 Straight-line

2 Apr. 1, 2009 60,000 6,000 4 Declining-balance

3 Sept. 1, 2009 84,000 4,000 8 Units-of-activity

4 Jan. 1, 2010 100,000 9,000 10 Declining balance

5 Dec. 1 2011 50,000 2,000 4 Straight line

For the declining-balance method, Singh Company uses the double-declining rate. For

the units-of-activity method, total machine hours are expected to be 40,000. Actual hours

of use in the first 3 years were: 2009, 1,200; 2010, 6,400; and 2011, 7,000.

Instructions

(a) Compute the amount of accumulated depreciation on each machine at December 31, 2011. Don’t forget to deal with partial years.