Posted: February 4th, 2015

FINANCIAL ACCOUNTING;Discussion WK5

FINANCIAL ACCOUNTING;Discussion WK5

FIRST PAGE

1-    In the spotlight about FedEx Corporation, you get a feel for the amount of investment in assets and the resulting liabilities that are required to operate a

competitive corporation. Even small businesses require plant, property, and equipment to compete and normally rely on some form of debt to finance themselves. Let’s

start up a company that sells auto parts, like Napa or Auto Zone. What assets would we require? How might we finance them?

2-    What is depreciation? What are the different methods and when would each be appropriate? How do we apply this concept to natural resources? Intangibles?

SECOND PAGE

1-    Let’s start with Exercise 3-30A. For the Anderson Production Company, select one adjusting and one closing entry requirement. Develop the journal entry for

review by your peers. Make sure to reference any page numbers of examples you are using. Hint: Revisit the Week 2 Lecture.

E3-30A
(Learning Objectives 3, 5: Adjust the accounts, close the books) The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance

of Anderson Production Company follow.

Requirement
1. Journalize the adjusting and closing entries of Anderson Production Company at December 31. There was only one adjustment to Service Revenue.

2- Let’s start with  E7-19A  Ralph’s Pizza on page 441 of your text book.
I look forward to your attempts.

E7-19A
(Learning Objective 3: Determine depreciation amounts by three methods) Ralph’s Pizza bought a used Toyota delivery van on January 2, 2012, for $18,600. The van was

expected to remain in service for four years (35,000 miles). At the end of its useful life, Ralph’s officials
440
441
estimated that the van’s residual value would be $2,500. The van traveled 13,500 miles the first year, 12,000 miles the second year, 3,500 miles the third year, and

6,000 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods discussed in this chapter. (For

units-of-production and double-declining-balance, round to the nearest two decimals after each step of the calculation.)
Which method best tracks the wear and tear on the van? Which method would Ralph’s prefer to use for income tax purposes? Explain in detail why Ralph’s prefers this

method.

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