Question 1 - Reading Corp. purchased a new lithographic equipment at a cost of $160,000 at the beginning of a fiscal year. The equipment has a straight line depreciation useful life of 8 years and an estimated residual value of $23,000.
Instructions: Calculate the depreciation for each fiscal year using the declining-balance method at twice the rate of straight line depreciation.
Question 2- The following are selected transactions of Ricks Auto Part. Ricks prepares financial statements semi annually.
Jan 1 Purchased merchandise on account from Autocraft, $15,000, terms 1/5, n/eom.
Feb 1 Issued a 15%, 6 month, $15,000 note to Autocraft in payment of account.
Feb 20 Purchased supplies from Mobil Oil paying $400 in cash and signing a 8%, 2 month, $1,500 note.
Apr 20 Paid face value and interest on Mobil Oil note.
Jun 1 Accrued interest for 6 months Autocraft note.
July 5 Borrowed $30,000 from Bankers Bank by issuing a 4 month, 10% note .
Aug 1 Paid face value and interest on Autocraft note.
Nov 5 Paid face value and interest on Bankers Bank note.
Instructions: Prepare journal entries for the above transactions and events.