17 Jul Home>Business & Finance homework help>Accounting homework help??? Semester Case – Cowboy Ice Cream, Inc. In a
Semester Case – Cowboy Ice Cream, Inc.
In an effort to enable growth within the company, CIC is considering purchase of a building and the land on which it is located. They believe they’ve found the ideal property and have negotiated a purchase price of $625,000. The land has been appraised at $306,000 and building at $374,000.
If CIC makes this purchase, some substantial remodel work will need to be done to the building. They’ve selected a potential contractor and negotiated a price of $95,000 for labor and materials.
CIC estimates that the building will have an estimated useful life of 30 years with a $50,000 salvage value.
Once the remodeling is complete, CIC will also purchase and install a freezer that has a list price of $3,700. The supplier offers a 3 percent discount if CIC pays cash (which it plans to do). Delivery terms were FOB shipping point and freight costs will be $450. The freezer will require special installation which will cost $250. CIC estimates the freezer will have an estimated useful life of 7 years and a salvage value of $300.
Opening this location will mean that CIC will likely generate additional wages and other operating expenses of $52,000 per year.
Before completing any of the above transactions, CIC would also acquire $800,000 by signing a note payable.
Assuming CIC enters into the above transactions and operates the new location for one year, record the impact of each of the above items on the statement model provided on the next page.CIC uses the straight line method of depreciation. Round all computations to the nearest whole dollar.
Additionally, complete the depreciation schedule for the life of the freezer.
Purch. & install freezer
Pay operating expenses
Record depr: building
Record depr: freezer
Depreciation schedule – freezer
Exact Photo Service purchase a new color printer at the beginning of 2019 for $28,000. The printer is expected to have a four-year useful life and a $3,500 salvage value. The expected print production is estimated at 1,500,000 pages. Actual print production for the four years was as follows:
The printer was sold at the end of 2021 for $1,650.
(a) Compute the depreciation expense, accumulated depreciation and book value each year of the four years using the straight-line method.
(b) Compute the depreciation expense, accumulated depreciation and book value each year of the four years, using the units-of-production method.
(c) Calculate the amount of gain or loss from the sale of the asset.
(d) Record the 2021 depreciation expense and sale of the printer in the horizontal statements model for both the straight-line and units-of-production methods:
Sale of Printer
Sale of Printer
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