Question

a1. Lobo Company purchased equipment for $40,000 with a useful life of five years and no expected salvage value. Prepare the adjusting entry for the first year using the straight-line depreciation method. Omit explanations. If an amount box does not require, leave it blank. Page: 1 DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 a1. fill in the blank 1de76e004042078_2 fill in the blank 1de76e004042078_3 1 2 fill in the blank 1de76e004042078_5 fill in the blank 1de76e004042078_6 2 a2. Lobo Company purchased equipment for $40,000 with a useful life of five years and no expected salvage value. Compute the book value at the end of the second year of the equipment's life. Book Value $fill in the blank b486c302c064055_1 b. Zip Company pays its employees every Friday. On January 4, 20--, the Company paid $2,200 for the 5 days beginning the previous Monday, December 31. Prepare the adjusting entry on December 31. Omit explanations. If an amount box does not require, leave it blank.

Answer 1

Answer:

a1. Dr Depreciation Expense $8,000

Cr Accumulated Depreciation $8,000

a2. $24,000

b2. December 31

Dr Wages Expenses $440

Cr Wages payable $440

Explanation:

a1. Preparation of the adjusting entry for the first year using the straight-line depreciation method.

Dr Depreciation Expense $8,000

Cr Accumulated Depreciation $8,000

($40,000/5 years)

a2. Computation of the book value at the end of the second year of the equipment's life.

First step is to calculate the First year Book value

First year Book value=$40,000/5 years

First year Book value=$8,000

Second step is to calculate the Second year Book value

Second year Book value=($40,000+$40,000)/5 years

Second year Book value=$80,000/5 years

Second year Book value=$16,000

Now let compute the book value at the end of the second year of the equipment's life.

Book value at the end of the second year=$8,000+$16,000

Book value at the end of the second year=$24,000

Therefore the Book value at the end of the second year will be $24,000

b1. Preparation of the adjusting entry on December 31

December 31

Dr Wages Expenses $440

Cr Wages payable $440

($2,200/5 years)