Problem 1: If a firm's earnings before interest and taxes are $367,000 and its interest expense is $122,000 what is the firm's times interest earned ratio.
Problem 2: A firm purchased a patent for $910,000 and it has a legal life of 14 years and a useful life of 13 years provide the journal entry to record the first year's amortization expense.
Problem 3: The actual mileage for the four years was a follows:
Year Miles
1 39,000
2 42,000
3 37,000
4 29,000
5 27,000
Provide the journal entry for each of the four years assuming the firm used the activity based depreciation method.
Problem 4: On January 2 the firm purchased a new van that would cost $190,000 and $20,000 in estimated salvage value.
The estimated useful life of the van in years is 5 and the estimated useful life in miles is 140,000 miles.
Required: What would be the annual journal entry for depreciation expense assuming the firm used straight line depreciation method?