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F 9Prepare journal entries to record ((3) 2018 depreciation expense, (4) the 2019 impb.Calculate the book value of the machine at the end of 2019 (that is, after recording the depreciaRequiredPenscSxpenseEYdisputa.locateof thetion expense for 2019).accoSERIAL PROBLEM: KATE'S CARDS(Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters 1 through 8.)$150empquaSiteKate's business is growing faster than she had predicted. In order to keep up, she will need to purchaseimproved computer hardware. Kate has learned that the software that she uses runs much faster if hercomputer has a lot of memory. In addition, her files are very large and she is running out of free spaceon her existing hard drive. Finally, Kate has heard horror stories about hard disk drive crashes and theSP9.orKate'spossibility that all of her work will be destroyed. In order to protect against this possibility, she hasCardsanexthThe cost of the memory and hard disk drive upgrade to Kate's computer will total $420. The costof the backup system is $3,000. The memory and hard disk upgrade will increase the productivity fKate's current computer; however, it will not extend its useful life. The backup system is expected todecided to invest in a large commercial grade backup system.have a five-year useful life.Kate would like to know the following items:1. How should the expenditure for the memory and hard disk drive upgrade be recorded? Provide thejournal entry.2. Kate's current computer has 42 months remaining for depreciation purposes (under the straight-linemethod). The original cost of the computer was $4,800 and had a four-year useful life. The curntmonthly depreciation is $100. How will this current expenditure affect the monthly depreciation!3. Kate would like to know how depreciation on the backup system under both the straight-linemethod and the double-declining method differ. She is assigning a $500 salvage value to the equin-ment. Construct a table showing yearly depreciation under both methods.

Question

1 through 3 

F 9
Prepare journal entries to record (
(3) 2018 depreciation expense, (4) the 2019 imp
b.
Calculate the book value of the machine at the end of 2019 (that is, after recording the deprecia
Required
Pensc
Sxpense
EY
disput
a.
locate
of the
tion expense for 2019).
acco
SERIAL PROBLEM: KATE'S CARDS
(Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters 1 through 8.)
$150
emp
qua
Site
Kate's business is growing faster than she had predicted. In order to keep up, she will need to purchase
improved computer hardware. Kate has learned that the software that she uses runs much faster if her
computer has a lot of memory. In addition, her files are very large and she is running out of free space
on her existing hard drive. Finally, Kate has heard horror stories about hard disk drive crashes and the
SP9.
or
Kate's
possibility that all of her work will be destroyed. In order to protect against this possibility, she has
Cards
an
ex
th
The cost of the memory and hard disk drive upgrade to Kate's computer will total $420. The cost
of the backup system is $3,000. The memory and hard disk upgrade will increase the productivity f
Kate's current computer; however, it will not extend its useful life. The backup system is expected to
decided to invest in a large commercial grade backup system.
have a five-year useful life.
Kate would like to know the following items:
1. How should the expenditure for the memory and hard disk drive upgrade be recorded? Provide the
journal entry.
2. Kate's current computer has 42 months remaining for depreciation purposes (under the straight-line
method). The original cost of the computer was $4,800 and had a four-year useful life. The curnt
monthly depreciation is $100. How will this current expenditure affect the monthly depreciation!
3. Kate would like to know how depreciation on the backup system under both the straight-line
method and the double-declining method differ. She is assigning a $500 salvage value to the equin-
ment. Construct a table showing yearly depreciation under both methods.
help_outline

Image Transcriptionclose

F 9 Prepare journal entries to record ( (3) 2018 depreciation expense, (4) the 2019 imp b. Calculate the book value of the machine at the end of 2019 (that is, after recording the deprecia Required Pensc Sxpense EY disput a. locate of the tion expense for 2019). acco SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters 1 through 8.) $150 emp qua Site Kate's business is growing faster than she had predicted. In order to keep up, she will need to purchase improved computer hardware. Kate has learned that the software that she uses runs much faster if her computer has a lot of memory. In addition, her files are very large and she is running out of free space on her existing hard drive. Finally, Kate has heard horror stories about hard disk drive crashes and the SP9. or Kate's possibility that all of her work will be destroyed. In order to protect against this possibility, she has Cards an ex th The cost of the memory and hard disk drive upgrade to Kate's computer will total $420. The cost of the backup system is $3,000. The memory and hard disk upgrade will increase the productivity f Kate's current computer; however, it will not extend its useful life. The backup system is expected to decided to invest in a large commercial grade backup system. have a five-year useful life. Kate would like to know the following items: 1. How should the expenditure for the memory and hard disk drive upgrade be recorded? Provide the journal entry. 2. Kate's current computer has 42 months remaining for depreciation purposes (under the straight-line method). The original cost of the computer was $4,800 and had a four-year useful life. The curnt monthly depreciation is $100. How will this current expenditure affect the monthly depreciation! 3. Kate would like to know how depreciation on the backup system under both the straight-line method and the double-declining method differ. She is assigning a $500 salvage value to the equin- ment. Construct a table showing yearly depreciation under both methods.

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check_circleAnswer
Step 1
  1.  

Expenditure for the memory and hard disk drive upgrade is a capital expenditure because it increases the efficiency of the computer and backup system are different asset thus, the journal entries are as follows:

 

Post
Debit
Credit
Account Title and Explanation
Date
Ref.
(S)
(S)
Computer
420
Cash
420
|(to record the purchase of hard disk)
Backup System
3,000
3,000
Cash
|(to record the cost of backup system)
help_outline

Image Transcriptionclose

Post Debit Credit Account Title and Explanation Date Ref. (S) (S) Computer 420 Cash 420 |(to record the purchase of hard disk) Backup System 3,000 3,000 Cash |(to record the cost of backup system)

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Step 2

2.

 

Depreciation is calculated as follows:

 

Thus, the current de...

Book value
Additional cost)
Straight-line depreciation
Remaining life in Months
$4,200 $420
42
=$110
help_outline

Image Transcriptionclose

Book value Additional cost) Straight-line depreciation Remaining life in Months $4,200 $420 42 =$110

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