1 answer

Please show work. 1. The following information is taken from Krom Corp.'s adjusted trial balance at...

Question:

Please show work.
1. The following information is taken from Krom Corp.s adjusted trial balance at 12/31/20. Debit Credit Equipment $800,000 A
1. The following information is taken from Krom Corp.'s adjusted trial balance at 12/31/20. Debit Credit Equipment $800,000 Accumulated depreciation $550,000 Prepaid Rent 105,000 Note Payable 1,500,000 Depreciation expense 110,000 Interest expense 33,750 Rent expense 180,000 a. Krom Corp. anticipates salvage of $30,000 on the equipment. Determine (1) the useful life anticipated by the company for its equipment and (2) the date the equipment was purchased (month/day/year). b. The note bears an annual interest rate of 10%. No cash was paid for interest this year. On what date was the note issued (month/day/year)? c. The prepaid rent contract was settled in 2019. No cash was paid for rent this year. On what date will the rent contract expire (month/day/year)?

Answers

a. $
Salvage value of equipment 30,000
1)
Cost 800,000
Salvage value of equipment 30,000
Depreciable value 770,000 800,000-30,000
SL method dep
Dep value/no. of years
Dep expense this year 110,000
770,000/no. of years= 110,000
therefore, no. of years 770,000/110,000
= 7 years
2)
Total accumulated dep inculding current year dep 550,000
every year dep charged 110,000
no.of years passed since property was purchased. 550,000/110,000=
5 years
12/31/2020 5 year
12/31/2019 4th Year
12/31/2018 3rd year
12/31/2017 2nd year
12/31/2016 1st year
therefore, property was purchased on 1/1/2016
.

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