Question : 31.Indicate how the current year’s net income statements for Laney : 1241906

 

31.Indicate how the current year’s net income statements for Laney and Monroe would differ.

32.Mondova Corporation began operations on January 1. Below is Mondova’s current net income statement and December 31 balance sheet calculated using straight-line depreciation.

Income Statement

 

Sales revenue

$20,000

 

 

Cost of goods sold

9,000

 

 

Gross profit

$ 11,000

 

 

Depreciation (Note 1)

3,000

 

 

Net income

$ 8,000

 

 

 

Balance Sheet

Current assets

 

 

$44,000

 

Equipment

$20,000

 

 

Accumulated depreciation

3,000

17,000

 

Total assets

 

$61,000

 

 

 

 

 

Liabilities (all current)

 

$45,000

 

Shareholders’ equity

 

16,000

 

Total liabilities &shareholders’ equity

$61,000

 

Note 1: Equipment was purchased on January 1. Straight-line depreciation method was used with an estimated economic life of 5 years.

 

A.Determine the estimated salvage value of the equipment being depreciated using the straight-line method.

B.Prepare an income statement and balance sheet in the same format as presented above assuming that Mondova Corporation uses the double-declining-balance depreciation method. The equipment has an estimated economic life of 5 years.

C.Calculate and compare Mondova’s December 31 current ratio, debt/equity ratio, and debt to assets ratio using the financial statements constructed using the straight-line and double-declining-balance methods of depreciation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33.              Several years ago, Welch Company purchased a copyright. Amortizing occurs on a straight-line basis over its estimated useful life. The company’s balance sheets follow at December 31, 2014, and 2013:

(In thousands)

December 31, 2014

December 31, 2013

Copyright, less accumulated amortization of $15,000 (2013)

and $18,000 (2014)

$132,000

$135,000

A.              How much amortization expense did Welch record during 2014?

B.              Calculate the original cost of the patent.

C.As of December 31, 2014, over how many years has Welch amortized the copyright?

34.On January 1, the balance in accumulated depreciation is $28,000. During the current year depreciation expense is $10,000 and equipment with a cost of $9,000 was sold for $3,000 at a loss of $1,000. Calculate the December 31 balance in accumulated depreciation.

35.The balance of accumulated depreciation on January 1 and December 31, 2013 is $54,000 and $58,000, respectively. During 2013, depreciation expense is $18,000, and equipment with a cost of $20,000 is sold for $4,000. Calculate the loss or gain from the sale of equipment.