question archive Problem 8 14,500 You requested a depreciation schedule for Semitrucks of Lamban Manufacturing Company showing the additions, retirements, depreciation and other data affecting the income of the Company in the 4-year period 2003 to 2006, inclusive
Problem 8 14,500 You requested a depreciation schedule for Semitrucks of Lamban Manufacturing Company showing the additions, retirements, depreciation and other data affecting the income of the Company in the 4-year period 2003 to 2006, inclusive
Subject:BusinessPrice: Bought3
Problem 8 14,500 You requested a depreciation schedule for Semitrucks of Lamban Manufacturing Company showing the additions, retirements, depreciation and other data affecting the income of the Company in the 4-year period 2003 to 2006, inclusive. The Semitrucks account consists of the following as of January 1, 2003: Truck No.1 purchased Jan.1, 2000, cost P180,000 Truck No.2 purchased July 1, 2000, cost 220,000 Truck No.3 purchased Jan.1, 2002, cost 300,000 Truck No.4 purchased July.1, 2002, cost 240.000 P 940.000 The Semi-trucks - Accumulated Depreciation account previously adjusted to January 1, 2003, and duly entered to the ledger, had a balance on that date of P302,000 (depreciation on the 4 trucks from respective date of purchase, based on five-year life, no salvage value). No charges have been made against the account before January 1, 2003. Transactions between January 1, 2003 and December 31, 2006, and their record in the ledger were as follows: July 1, 2003 Truck No. 3 was traded for larger one (No.5), the agreed purchase price of which was P340,000. Lamban Mfg. Co. paid the automobile dealer P150,000 cash on the transaction. The entry was debit to Semitrucks and a credit to cash, P150,000. Jan. 1, 2004 Truck No. 1 was sold for P35,000 cash; entry debited Cash and credited Semitrucks, P35,000. July 1, 2005 A new truck (No. 6) was acquired for P360,000 cash and was charged at that amount to Semitrucks account. (Assume truck No. 2 was not retired.) 115 of 121 July 1, 2005 Truck No.4 was damaged in a wreck to such an extent that it was sold as junk for P7,000 cash. Lamban Mfg. Co. received P25,000 from the insurance company. The entry made by the bookkeeper was a debit to cash, P32,000, and credits to Miscellaneous Income, P7,000 and Semitrucks P25,000. Entries for depreciation had been made for the close of each year as follows: 2003, P203,000; 2004, P211,000; 2005, P244,500; 2006, P278,000. Questions: Based on the above and the result of your audit, determine the following: (Disregard tax implications) 32. The 2006 depreciation expense is a. P138,000 b. P184,000 c. P104,000 d. P140,000 33. The carrying amount of Semitrucks as of December 31, 2006 is a. P885,400 b. P284,000 C. P504,000 d. P354,000 34. The 2003 net income is overstated by a. P9,000 b. P20,000 C. P31,000 d. PO 35. The 2004 net income is understated by a. P16,000 b. P50,000 C. P51,000 d. PO 36. The 2005 net income is understated by a. P23,500 b. P94,500 C. P64,500 d. PO
