Steve’s Outdoor Company purchased a new delivery van on January 1 for $58,000 plus $4,900 in sales tax. The company paid $13,900 cash on the van (including the sales tax), signing an 8 percent note for the $49,000 balance due in nine months (on September 30). On January 2, the company paid cash of $750 to have the company name and logo painted on the van. On September 30, the company paid the balance due on the van plus the interest. On December 31 (the end of the accounting period), Steve’s Outdoor recorded depreciation on the van using the straight-line method with an estimated useful life of 5 years and an estimated residual value of $5,800. 1. Indicate the effects of each transaction on the accounting equation. (Enter decreases to account categories as negative amounts. If the transaction does not impact the accounting equation choose "No effect" in the first column under "Assets".) 2. Compute the acquisition cost of the van. 3. Compute the depreciation expense to be reported for Year 1.
Steve’s Outdoor Company purchased a new delivery van on January 1 for $58,000 plus $4,900 in sales tax. The company paid $13,900 cash on the van (including the sales tax), signing an 8 percent note for the $49,000 balance due in nine months (on September 30). On January 2, the company paid cash of $750 to have the company name and logo painted on the van. On September 30, the company paid the balance due on the van plus the interest. On December 31 (the end of the accounting period), Steve’s Outdoor recorded
1. Indicate the effects of each transaction on the
2. Compute the acquisition cost of the van.
3. Compute the depreciation expense to be reported for Year 1.
4. What would be the net book value of the van at the end of Year 2? (Amounts to be deducted should be indicated by a minus sign.)
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