Suppose the Atlanta Falcons purchased a new set of goal posts for $20,000 each. The Falcons expect the goal posts to have a useful life of five years and a salvage value of $1,000 each when they sell them to a local high school.
Required:
1. Compute the first years depreciation using the following methods:
a. Straight-line
b. Double-declining balance
2. Suppose the team depreciates the asset based on number of goals scored. The team anticipates goals to be 40 in the first year, 46 in the second year, 38 in the third, 50 in the fourth when they win the Super Bowl, and 45 in the fifth year. Compute their first year depreciation using the units-of-production method.
3. Which method do you think is the most representative of accurate depreciation of the goal posts?
During August 2013, DB Inc. completed the following transactions:
a. 8/1/13 - Purchased a new piece of equipment for $50,000 signing a six month, 8% note payable.
b. 8/10/13 - Issued 15,000 shares of $2.00 par stock at $8.00 per share.
c. 8/15/13 - Received an invoice for their telephones for $450.00 that will be paid next month.
d. 8/16/13 - Sold $320,000 in product sales and accrued 5% for warranty liability.
e. 8/30/13 - Received a summons that the company was being sued for terminating the office manager last month. The attorneys have advised the company that they will be liable to the employee for back pay of $3,800.
f. 8/31/13 - Purchased 200 shares of Treasury stock at $6.00 per share
g. 8/31/13 - Accrued interest on the note signed 8/1/13.
Required:
1. Prepare the journal entries for the above transactions.
1. Cindy Lou makes $30,000 per year as an exempt employee. She worked 15 hours of overtime in the month of September. Payday for wages earned in the month of September is October 7. Ignoring Federal and State income tax withholdings, how much would she receive for September net of Social Security and Medicare taxes? What journal entry would be made on September 30 for wages owed to Cindy? What journal entry would be made when she is paid on October 7?