Acc205 Principles of Accounting I: Week 5 Assignment (E9-14, P9-28A & E10-13)

Acc205 Principles of Accounting I (9th ed) Week 5 Assignment (E9-14, P9-28A & E10-13) E9-14 Deadwood Properties P9-28A Trusty Delivery Service E10-13 Henry Striker (Frosty Boy Drive-in) E9-14 Lump-sum purchase of assets Deadwood Properties bought 3 lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Lot Appraisal Value 1 70,500 2 235,000 3 164,500 Deadwood paid $210,000 in cash Requirement: Record the purchase in the journal, identifying each lot's cost in separate Land account. Round decimals to two places, and use your computed percentages throughout. P9-28A Capitalized asset cost and first year depreciation, and identifying depreciation results that meet management objectives On January 3, 2012, Trusty Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Trusty spent $3,000 painting it, $1,500 replacing tires, and $4,500 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck's annual mileage is expected to be 22,500 miles in each of the first four years and 10,000 miles in the fifth year—100,000 miles in total. In deciding which depreciation method to use, Mikail Johnson, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. Trusty prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year that Trusty uses the truck. Identify the depreciation methods that meet the general manager's objectives, assuming the income tax authorities permit the use of any of the methods. E10-13 Computing and recording gross and net pay Henry Striker manages a Frosty Boy Drive-in. His straight-time pay is $10.00 per hour, with time-and-a-half for hours in excess of 40 per week. Striker's payroll deduction include withheld income tax of 8%, FICA tax of 7.65%, and weekly deduction of $5 for a charitable contribution to the United Fund. Striker worked 52 hours during the week. Requirements: 1. Compute Striker's gross pay and net pay for the week. Carry amounts to the nearest cent. 2. Journalize Frosty Boy's wage expense accrual for Striker's work. An explanation is not required. 3. Journalize the subsequent payment of wages to Striker.