Business, 26.10.2021 21:40 ohshushan2
Cost and Depreciation
On January 1, Quick Stop, a convenience store, purchased a new soft-drink cooler. Quick Stop paid $23,000 cash for the cooler. Quick Stop also paid $730 to have the cooler shipped to its location. After the new cooler arrived, Quick Stop paid $2,410 to have the old cooler dismantled and removed. Quick Stop also paid $820 to a contractor to have new wiring and drains installed for the new cooler. Quick Stop estimated that the cooler would have a useful life of 6 years and a residual value of $200. Quick Stop uses the straight-line method of depreciation.
1. Prepare any necessary journal entries to record the cost of the cooler Jan. 1 (Record purchase of equipment)
2. Prepare the adjusting entry to record 2019 depreciation expense on the new cooler Dec. 31 (Record straight-line depreciation)
3. What is the book value of the cooler at the end of 2019?
4. Conceptual Connection: If Quick Stop had used a useful life of 10 years and a residual value of $1,500, how would this effect depreciation expense for 2019 and the book value of the cooler at the end of 2019? Depreciation expense for 2019 Book value of the cooler at the end of 2019
Answers: 1
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Cost and Depreciation
On January 1, Quick Stop, a convenience store, purchased a new soft-drink co...
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