Chapter 6 - Manual Page 1 7/25/2023

Integrated Accounting 8th

Edition Klooster
Solutions Manual
Full download at link:
https://testbankpack.com/p/solution-manual-
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klooster-allen-and-owen-1285462726-
9781285462721/
Chapter 6

FIXED ASSETS

STUDENT EXERCISES
I. TRUE/FALSE

1. T
2. T
3. T
4. F
5. T
6. F
7. T
8. T
9. F

II. QUESTIONS

1. Automobiles, trucks, computers, office equipment, and technological

equipment.
2. $560.00
3. To show costs.
To show reduction in value due to usage.
To show asset disposition.
To generate and post adjusting entries.
To ensure adequate insurance coverage.
In case of insurance claim, to determine the amount of the
settlement.
To estimate the worth of the asset for trade-in value.
4. General Journal report.

PROBLEM 6-A

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Chapter 6 - Manual Page 2 7/25/2023

Savoy Merchandise Co.

General Journal
11/30/13

Date Refer. Acct. Title Debit Credit

11/01 113 1521 Accum. Depr. Office Eqpt. 375.00

11/01 113 1520 Office Equipment 375.00

11/04 3839 1520 Office Equipment 509.99

11/04 3839 1110 Cash 509.99

11/10 3840 1520 Office Equipment 5,150.00

11/10 3840 1110 Cash 5,150.00

11/12 3841 1530 Office Furniture 395.00

11/12 3841 1110 Cash 395.00

11/14 3842 1530 Office Furniture 589.95

11/14 3842 1110 Cash 589.95

11/20 3843 1510 Vehicles 12,000.00

11/20 3843 1110 Cash 12,000.00

11/25 3844 1520 Office Equipment 2,785.00

11/25 3844 1110 Cash 2,785.00
-------------- --------------
Totals 21,804.94 21,804.94
============== ==============

Savoy Merchandise Co.

Fixed Assets List
11/30/13

Date Depr. Useful Original Salvage Depr.

Asset Acquired Method Life Cost Value Accts

110 Harada F80 Auto 05/17/13 MACRS 5 14,500.00 2,300.00 1511

6130
120 Veigel G350 Van 11/30/12 SL 5 18,000.00 1,500.00 1511
6130
130 Delivery Truck 10/03/13 SL 5 17,250.00 2,000.00 1511
6130
140 Pickup Truck 11/20/13 SL 5 12,000.00 1,800.00 1511
6130
210 M3 Printing Press 02/28/13 SL 7 58,500.00 5,000.00 1521
6520
215 Binding Machine 11/04/13 DDB 6 509.99 50.00 1521
6520
220 P500 Computer 07/18/13 DDB 5 2,450.00 300.00 1521
6520
225 HC-2530 Computer 11/25/13 DDB 5 2,785.00 225.00 1521
6520
230 HC10 Laser Printer 07/18/13 SL 5 1,650.00 175.00 1521
6520
240 Saga Notebook Comp 09/15/13 SL 4 2,295.00 250.00 1521
6520
250 Z10 Copy Machine 10/03/13 DDB 5 2,995.00 335.00 1521
6520
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 3 7/25/2023

260 File Server 10/17/13 DDB 5 4,185.00 500.00 1521

6520
270 GX10 Laser Printer 10/17/13 DDB 5 2,189.50 350.00 1521
6520
280 Facsimile Machine 10/21/13 MACRS 5 3,899.00 400.00 1521
6520
290 K6 Telephone System 11/10/13 SL 7 5,150.00 515.00 1521
6520
310 Conf. Table & Chairs 01/31/13 MACRS 7 6,200.00 950.00 1531
6525
320 Receptionist Station 08/22/13 MACRS 7 2,195.00 350.00 1531
6525
330 Office Desk & Chair 06/16/13 SL 6 3,085.00 650.00 1531
6525
340 Storage Cabinet 10/09/13 SL 10 2,360.00 225.00 1531
6525
350 Office Desk 10/14/13 SL 10 1,495.00 260.00 1531
6525
360 Security Vault 10/27/13 SL 20 5,975.00 450.00 1531
6525
370 File Cabinet 11/12/13 MACRS 7 395.00 45.00 1531
6525
380 Shelving 11/14/13 SL 10 589.95 75.00 1531
6525
-----------
Total Fixed Assets 170,653.44
===========

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum. Book

Year Deprec. Deprec. Value

(140) Pickup Truck 2013 340.00 340.00 11,660.00

Acquired on 11/20/13 2014 2,040.00 2,380.00 9,620.00
Straight-Line 2015 2,040.00 4,420.00 7,580.00
Useful Life = 5 2016 2,040.00 6,460.00 5,540.00
Original Cost = 12,000.00 2017 2,040.00 8,500.00 3,500.00
Salvage Value = 1,800.00 2018 1,700.00 10,200.00 1,800.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(215) Binding Machine 2013 28.33 28.33

481.66
Acquired on 11/04/13 2014 160.54 188.87
321.12
Double Declining-Balance 2015 107.03 295.90
214.09
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 4 7/25/2023

Useful Life = 6 2016 71.36 367.26

142.73
Original Cost = 509.99 2017 47.57 414.83
95.16
Salvage Value = 50.00 2018 31.72 446.55
63.44
2019 13.44 459.99
50.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(225) HC-2530 Computer 2013 185.67 185.67

2,599.33
Acquired on 11/25/13 2014 1,039.73 1,225.40
1,559.60
Double Declining-Balance 2015 623.84 1,849.24
935.76
Useful Life = 5 2016 374.30 2,223.54
561.46
Original Cost = 2,785.00 2017 224.58 2,448.12
336.88
Salvage Value = 225.00 2018 111.88 2,560.00
225.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(290) K6 Telephone System 2013 110.36 110.36

5,039.64
Acquired on 11/10/13 2014 662.14 772.50
4,377.50
Straight-Line 2015 662.14 1,434.64
3,715.36
Useful Life = 7 2016 662.14 2,096.78
3,053.22
Original Cost = 5,150.00 2017 662.14 2,758.92
2,391.08
Salvage Value = 515.00 2018 662.14 3,421.06
1,728.94

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 5 7/25/2023

2019 662.14 4,083.20

1,066.80
2020 551.80 4,635.00
515.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(370) File Cabinet 2013 56.45 56.45

338.55
Acquired on 11/12/13 2014 96.74 153.19
241.81
MACRS 2015 69.09 222.28
172.72
Useful Life = 7 2016 49.34 271.62
123.38
Original Cost = 395.00 2017 35.27 306.89
88.11
Salvage Value = 45.00 2018 35.23 342.12
52.88
2019 35.27 377.39
17.61
2020 17.61 395.00
0.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(380) Shelving 2013 8.58 8.58

581.37
Acquired on 11/14/13 2014 51.50 60.08
529.87
Straight-Line 2015 51.50 111.58
478.37
Useful Life = 10 2016 51.50 163.08
426.87
Original Cost = 589.95 2017 51.50 214.58
375.37
Salvage Value = 75.00 2018 51.50 266.08
323.87
2019 51.50 317.58
272.37
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 6 7/25/2023

2020 51.50 369.08

220.87
2021 51.50 420.58
169.37
2022 51.50 472.08
117.87
2023 42.87 514.95
75.00

Savoy Merchandise Co.

Trial Balance
11/30/13

Acct. Account
Number Title Debit Credit

1110 Cash 43,157.23

1120 Accounts Receivable 61,988.54
1130 Merchandise Inventory 133,300.00
1140 Prepaid Insurance 3,302.30
1150 Supplies 2,880.00
1510 Vehicles 61,750.00
1511 Accum. Depr. Vehicles 5,389.71
1520 Office Equipment 86,608.49
1521 Accum. Depr. Office Eqpt. 6,015.07
1530 Office Furniture 22,294.95
1531 Accum. Depr. Office Furn. 1,076.94
2110 Accounts Payable 46,736.17
2120 Sales Tax Payable 483.32
2510 Note Payable 30,309.00
3110 Emily Madigan, Capital 306,050.60
3120 Emily Madigan, Drawing 15,600.00
3130 Income Summary 4,093.20
4110 Sales 384,050.18
4111 Sales Returns & Allow. 5,728.43
4112 Sales Discounts 4,231.44
5110 Cost of Merchandise Sold 248,291.19
6110 Sales Salary Expense 24,372.20
6120 Advertising Expense 12,380.50
6125 Delivery Expense 650.00
6130 Depr. Expense Vehicles 7,263.82
6140 Supplies Expense 2,450.92
6150 Misc. Selling Expense 680.00
6510 Rent Expense 4,533.00
6520 Depr. Expense Off. Eqpt. 7,358.49
6525 Depr. Expense Off. Furn. 1,228.08
6530 Misc. General Expense 412.20
6540 Office Salary Expense 14,917.74
6550 Insurance Expense 672.00
6560 Telephone Expense 1,897.46
6570 Heating & Lighting Exp. 2,522.58
6580 Legal & Prof. Fees Exp. 4,275.00
7110 Interest Income 274.45
8110 Interest Expense 1,545.68
----------------- -----------------
Totals 780,385.44 780,385.44
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 7 7/25/2023

================= =================

Savoy Merchandise Co.

General Journal
11/30/13

Date Refer. Acct. Title Debit Credit

11/30 Adj.Ent 6550 Insurance Expense 345.00

11/30 Adj.Ent 1140 Prepaid Insurance 345.00

11/30 Adj.Ent 6140 Supplies Expense 645.00

11/30 Adj.Ent 1150 Supplies 645.00

11/30 Dep.Adj. 6130 Depr. Expense Vehicles 1,061.67

11/30 Dep.Adj. 6520 Depr. Expense Off. Eqpt. 1,520.17
11/30 Dep.Adj. 6525 Depr. Expense Off. Furn. 253.99
11/30 Dep.Adj. 1511 Accum. Depr. Vehicles 1,061.67
11/30 Dep.Adj. 1521 Accum. Depr. Office Eqpt. 1,520.17
11/30 Dep.Adj. 1531 Accum. Depr. Office Furn. 253.99
-------------- --------------
Totals 3,825.83 3,825.83
============== ==============

Savoy Merchandise Co.

Income Statement
For Period Ended 11/30/13

Monthly Monthly Yearly Yearly

Amount Percent Amount Percent

Operating Revenue

Sales 60,634.90 100.80

384,050.18 102.66
Sales Returns & Allow. -5,728.43 -1.53
Sales Discounts -480.00 -0.80 -4,231.44 -1.13
------------- ------------- ------------- ----------
Total Operating Revenue 60,154.90 100.00 374,090.31 100.00

Cost

Cost of Merchandise Sold 38,350.90 63.75 248,291.19 66.37

------------- ------------- ------------- ----------
Total Cost 38,350.90 63.75 248,291.19 66.37
------------- ------------- ------------- ----------
Gross Profit 21,804.00 36.25 125,799.12 33.63

Operating Expenses

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 8 7/25/2023

Sales Salary Expense 3,791.42 6.30 24,372.20 6.52

Advertising Expense 165.00 0.27 12,380.50 3.31
Delivery Expense 265.00 0.44 650.00 0.17
Depr. Expense Vehicles 1,061.67 1.76 8,325.49 2.23
Supplies Expense 645.00 1.07 3,095.92 0.83
Misc. Selling Expense 110.00 0.18 680.00 0.18
------------- ------------- ------------- ----------
Total Selling Expenses 6,038.09 10.04 49,504.11 13.23

Rent Expense 930.00 1.55 4,533.00 1.21

Depr. Expense Off. Eqpt. 1,520.17 2.53 8,878.66 2.37
Depr. Expense Off. Furn. 253.99 0.42 1,482.07 0.40
Misc. General Expense 80.00 0.13 412.20 0.11
Office Salary Expense 2,940.00 4.89 14,917.74 3.99
Insurance Expense 345.00 0.57 1,017.00 0.27
Telephone Expense 507.00 0.84 1,897.46 0.51
Heating & Lighting Exp. 601.25 1.00 2,522.58 0.67
Legal & Prof. Fees Exp. 350.00 0.58 4,275.00 1.14
------------- ------------- ------------- ----------
Total Administrative Expense 7,527.41 12.51 39,935.71 10.68
------------- ------------- ------------- ----------
Total Operating Expenses 13,565.50 22.55 89,439.82 23.91
------------- ------------- ------------- ----------
Net Income from Operations 8,238.50 13.70 36,359.30 9.72

Other Revenue

Interest Income 85.35 0.14 274.45 0.07

Other Expense

Interest Expense 104.00 0.17 1,545.68 0.41

------------- ------------- ------------- ----------
Net Income 8,219.85 13.66 35,088.07 9.38
============= ============= ============= ==========

Savoy Merchandise Co.

Statement of Owner's Equity
For Period Ended 11/30/13

Emily Madigan, Capital (Beg. of Period) 306,050.60

Emily Madigan, Drawing -15,600.00
Net Income 30,994.87
-------------
Emily Madigan, Capital (End of Period) 321,445.47
=============

Savoy Merchandise Co.

Balance Sheet
11/30/13

Assets

Cash 43,157.23
Accounts Receivable 61,988.54
Merchandise Inventory 133,300.00
Prepaid Insurance 2,957.30
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 9 7/25/2023

Supplies 2,235.00
-------------
Total Current Assets 243,638.07

Vehicles 61,750.00
Accum. Depr. Vehicles -6,451.38
Office Equipment 86,608.49
Accum. Depr. Office Eqpt. -7,535.24
Office Furniture 22,294.95
Accum. Depr. Office Furn. -1,330.93
-------------
Total Plant Assets 155,335.89
-------------
Total Assets 398,973.96
=============

Liabilities

Accounts Payable 46,736.17

Sales Tax Payable 483.32
-------------
Total Current Liabilities 47,219.49

Note Payable 30,309.00

-------------
Total Long Term Liabilities 30,309.00
-------------
Total Liabilities 77,528.49

Owner's Equity

Emily Madigan, Capital 306,050.60

Emily Madigan, Drawing -15,600.00
Net Income 30,994.87
-------------
Total Owner's Equity 321,445.47
-------------
Total Liabilities & Equity 398,973.96
=============

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Chapter 6 - Manual Page 10 7/25/2023

Savoy Merchandise Co.

Depreciation Schedules
As Of 11/30/13

SL DDB MACRS
Annual Annual Annual
Year Deprec. Deprec. Deprec.
(140) Pickup Truck 2013 $340.00 $800.00 $2,400.00
Acquired on 11/20/13 2014 $2,040.00 $4,480.00 $3,840.00
Depreciation Methods 2015 $2,040.00 $2,688.00 $2,304.00
Useful Life = 5 2016 $2,040.00 $1,612.80 $1,382.40
Original Cost = 12,000.00 2017 $2,040.00 $619.20 $1,382.40
Salvage Value = 1,800.00 2018 $1,700.00 $691.20

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 11 7/25/2023

MEMORANDUM
TO: Manager, Accounting Department

FROM: Your name

DATE: (Today's Date)

SUBJECT: Depreciation Schedule Comparisons

As per your request, the following table depicts a comparison of the straight-
line, double declining-balance, and MACRS methods of depreciation for Asset No.
140-Pickup Truck.

SL DDB MACRS
Annual Annual Annual
Year Deprec. Deprec. Deprec.
(140) Pickup Truck 2013 $340.00 $800.00 $2,400.00
Acquired on 11/20/13 2014 $2,040.00 $4,480.00 $3,840.00
Depreciation Methods 2015 $2,040.00 $2,688.00 $2,304.00
Useful Life = 5 2016 $2,040.00 $1,612.80 $1,382.40
Original Cost = 12,000.00 2017 $2,040.00 $619.20 $1,382.40
Salvage Value = 1,800.00 2018 $1,700.00 $691.20

Student responses to the Internet activity will vary.

AUDIT QUESTIONS 6-A

1. $1,495.00
2. $400.00
3. $170,653.44
4. November 10, 2013
5. $47.57
6. $272.37
7. Debit Credit
Depr. Expense Vehicles $1,061.67
Accum. Depr.Vehicles $1,061.67
Depr. Expense Off. Eqpt. $1,520.17
Accum. Depr. Office Eqpt. $1,520.17
Depr. Expense Off. Furn. $253.99
Accum. Depr. Office Furn. $253.99
8. $8,219.85
9. 9.38%
10. $321,445.47
11. $398,973.96
12. double declining-balance
13. double declining-balance

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 12 7/25/2023

PROBLEM 6-B

Savoy Merchandise Co.

General Journal
11/30/13

Date Refer. Acct. Title Debit Credit

11/01 113 1521 Accum. Depr. Office Eqpt. 375.00

11/01 113 1520 Office Equipment 375.00

11/04 3839 1520 Office Equipment 1,240.00

11/04 3839 1110 Cash 1,240.00

11/10 3840 1520 Office Equipment 4,500.00

11/10 3840 1110 Cash 4,500.00

11/12 3841 1530 Office Furniture 516.50

11/12 3841 1110 Cash 516.50

11/14 3842 1530 Office Furniture 639.99

11/14 3842 1110 Cash 639.99

11/20 3843 1510 Vehicles 11,950.00

11/20 3843 1110 Cash 11,950.00

11/25 3844 1520 Office Equipment 3,095.00

11/25 3844 1110 Cash 3,095.00
-------------- --------------
Totals 22,316.49 22,316.49
============== ==============

Savoy Merchandise Co.

Fixed Assets List
11/30/13

Date Depr. Useful Original Salvage

Depr.
Asset Acquired Method Life Cost Value Accts

110 Harada F80 Auto 05/17/13 MACRS 5 14,500.00 2,300.00 1511

6130
120 Veigel G350 Van 11/30/12 SL 5 18,000.00 1,500.00 1511
6130
130 Delivery Truck 10/03/13 SL 5 17,250.00 2,000.00 1511
6130
140 Utility Vehicle 11/20/13 SL 5 11,950.00 1,250.00 1511
6130
210 M3 Printing Press 02/28/13 SL 7 58,500.00 5,000.00 1521
6520
215 Typesetting Machine 11/04/13 SL 6 1,240.00 75.00 1521
6520
220 P500 Computer 07/18/13 DDB 5 2,450.00 300.00 1521
6520
225 Web Server 11/25/13 DDB 5 3,095.00 235.00 1521
6520
230 HC10 Laser Printer 07/18/13 SL 5 1,650.00 175.00 1521

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 13 7/25/2023

6520
240 Saga Notebook Comp 09/15/13 SL 4 2,295.00 250.00 1521
6520
250 Z10 Copy Machine 10/03/13 DDB 5 2,995.00 335.00 1521
6520
260 File Server 10/17/13 DDB 5 4,185.00 500.00 1521
6520
270 CB10 Laser Printer 10/17/13 DDB 5 2,189.50 350.00 1521
6520
280 Alpha-5 Fax Machine 10/21/13 MACRS 5 3,899.00 400.00 1521
6520
290 Voice Mail System 11/10/13 DDB 7 4,500.00 500.00 1521
6520
310 Conf. Table & Chairs 01/31/13 MACRS 7 6,200.00 950.00 1531
6525
320 Receptionist Station 08/22/13 MACRS 7 2,195.00 350.00 1531
6525
330 Office Desk & Chair 06/16/13 SL 6 3,085.00 650.00 1531
6525
340 Storage Cabinet 10/09/13 SL 10 2,360.00 225.00 1531
6525
350 Office Desk 10/14/13 SL 10 1,495.00 260.00 1531
6525
360 Security Vault 10/27/13 SL 20 5,975.00 450.00 1531
6525
370 Bookshelf 11/12/13 MACRS 7 516.50 50.00 1531
6525
380 Glass Shelving 11/14/13 SL 10 639.99 70.00 1531
6525
-----------
Total Fixed Assets 171,164.99
===========

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(140) Utility Vehicle 2013 356.67 356.67

11,593.33
Acquired on 11/20/13 2014 2,140.00 2,496.67
9,453.33
Straight-Line 2015 2,140.00 4,636.67
7,313.33
Useful Life = 5 2016 2,140.00 6,776.67
5,173.33
Original Cost = 11,950.00 2017 2,140.00 8,916.67
3,033.33
Salvage Value = 1,250.00 2018 1,783.33 10,700.00
1,250.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 14 7/25/2023

Annual Accum.
Book
Year Deprec. Deprec.
Value

(215) Typesetting Machine 2013 32.36 32.36

1,207.64
Acquired on 11/04/13 2014 194.17 226.53
1,013.47
Straight-Line 2015 194.17 420.70
819.30
Useful Life = 6 2016 194.17 614.87
625.13
Original Cost = 1,240.00 2017 194.17 809.04
430.96
Salvage Value = 75.00 2018 194.17 1,003.21
236.79
2019 161.79 1,165.00
75.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(225) Web Server 2013 206.33 206.33

2,888.67
Acquired on 11/25/13 2014 1,155.47 1,361.80
1,733.20
Double Declining-Balance 2015 693.28 2,055.08
1,039.92
Useful Life = 5 2016 415.97 2,471.05
623.95
Original Cost = 3,095.00 2017 249.58 2,720.63
374.37
Salvage Value = 235.00 2018 124.79 2,845.42
249.58

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 15 7/25/2023

(290) Voice Mail System 2013 214.28 214.28

4,285.72
Acquired on 11/10/13 2014 1,224.43 1,438.71
3,061.29
Double Declining-Balance 2015 874.61 2,313.32
2,186.68
Useful Life = 7 2016 624.73 2,938.05
1,561.95
Original Cost = 4,500.00 2017 446.25 3,384.30
1,115.70
Salvage Value = 500.00 2018 318.76 3,703.06
796.94
2019 227.69 3,930.75
569.25
2020 69.25 4,000.00
500.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(370) Bookshelf 2013 73.81 73.81

442.69
Acquired on 11/12/13 2014 126.49 200.30
316.20
MACRS 2015 90.34 290.64
225.86
Useful Life = 7 2016 64.51 355.15
161.35
Original Cost = 516.50 2017 46.12 401.27
115.23
Salvage Value = 50.00 2018 46.07 447.34
69.16
2019 46.12 493.46
23.04
2020 23.04 516.50
0.00

Savoy Merchandise Co.

Depreciation Schedules
11/30/13

Annual Accum.
Book
Year Deprec. Deprec.
Value

(380) Glass Shelving 2013 9.50 9.50

630.49

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Chapter 6 - Manual Page 16 7/25/2023

Acquired on 11/14/13 2014 57.00 66.50

573.49
Straight-Line 2015 57.00 123.50
516.49
Useful Life = 10 2016 57.00 180.50
459.49
Original Cost = 639.99 2017 57.00 237.50
402.49
Salvage Value = 70.00 2018 57.00 294.50
345.49
2019 57.00 351.50
288.49
2020 57.00 408.50
231.49
2021 57.00 465.50
174.49
2022 57.00 522.50
117.49
2023 47.49 569.99
70.00

Savoy Merchandise Co.

Trial Balance
11/30/13

Acct. Account
Number Title Debit Credit

1110 Cash 42,645.68

1120 Accounts Receivable 61,988.54
1130 Merchandise Inventory 133,300.00
1140 Prepaid Insurance 3,302.30
1150 Supplies 2,880.00
1510 Vehicles 61,700.00
1511 Accum. Depr. Vehicles 5,389.71
1520 Office Equipment 86,998.50
1521 Accum. Depr. Office Eqpt. 6,015.07
1530 Office Furniture 22,466.49
1531 Accum. Depr. Office Furn. 1,076.94
2110 Accounts Payable 46,736.17
2120 Sales Tax Payable 483.32
2510 Note Payable 30,309.00
3110 Emily Madigan, Capital 306,050.60
3120 Emily Madigan, Drawing 15,600.00
3130 Income Summary 4,093.20
4110 Sales 384,050.18
4111 Sales Returns & Allow. 5,728.43
4112 Sales Discounts 4,231.44
5110 Cost of Merchandise Sold 248,291.19
6110 Sales Salary Expense 24,372.20
6120 Advertising Expense 12,380.50
6125 Delivery Expense 650.00
6130 Depr. Expense Vehicles 7,263.82
6140 Supplies Expense 2,450.92
6150 Misc. Selling Expense 680.00
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Chapter 6 - Manual Page 17 7/25/2023

6510 Rent Expense 4,533.00

6520 Depr. Expense Off. Eqpt. 7,358.49
6525 Depr. Expense Off. Furn. 1,228.08
6530 Misc. General Expense 412.20
6540 Office Salary Expense 14,917.74
6550 Insurance Expense 672.00
6560 Telephone Expense 1,897.46
6570 Heating & Lighting Exp. 2,522.58
6580 Legal & Prof. Fees Exp. 4,275.00
7110 Interest Income 274.45
8110 Interest Expense 1,545.68
----------------- -----------------
Totals 780,385.44 780,385.44
================= =================

Savoy Merchandise Co.

General Journal
11/30/13

Date Refer. Acct. Title Debit Credit

11/30 Adj.Ent. 6550 Insurance Expense 350.00

11/30 Adj.Ent. 1140 Prepaid Insurance 350.00

11/30 Adj.Ent. 6140 Supplies Expense 688.00

11/30 Adj.Ent. 1150 Supplies 688.00

11/30 Dep.Adj. 6130 Depr. Expense Vehicles 1,070.00

11/30 Dep.Adj. 6520 Depr. Expense Off. Eqpt. 1,584.48
11/30 Dep.Adj. 6525 Depr. Expense Off. Furn. 263.13
11/30 Dep.Adj. 1511 Accum. Depr. Vehicles 1,070.00
11/30 Dep.Adj. 1521 Accum. Depr. Office Eqpt. 1,584.48
11/30 Dep.Adj. 1531 Accum. Depr. Office Furn. 263.13
-------------- --------------
Totals 3,955.61 3,955.61
============== ==============

Savoy Merchandise Co.

Income Statement
For Period Ended 11/30/13

Monthly Monthly Yearly Yearly

Amount Percent Amount Percent

Operating Revenue

Sales 60,634.90 100.80

384,050.18 102.66
Sales Returns & Allow. -5,728.43 -1.53
Sales Discounts -480.00 -0.80 -4,231.44 -1.13
------------- ------------- ------------- ----------
Total Operating Revenue 60,154.90 100.00 374,090.31 100.00

Cost

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Chapter 6 - Manual Page 18 7/25/2023

Cost of Merchandise Sold 38,350.90 63.75 248,291.19 66.37

------------- ------------- ------------- ----------
Total Cost 38,350.90 63.75 248,291.19 66.37
------------- ------------- ------------- ----------
Gross Profit 21,804.00 36.25 125,799.12 33.63

Operating Expenses

Sales Salary Expense 3,791.42 6.30 24,372.20 6.52

Advertising Expense 165.00 0.27 12,380.50 3.31
Delivery Expense 265.00 0.44 650.00 0.17
Depr. Expense Vehicles 1,070.00 1.78 8,333.82 2.23
Supplies Expense 688.00 1.14 3,138.92 0.84
Misc. Selling Expense 110.00 0.18 680.00 0.18
------------- ------------- ------------- ----------
Total Selling Expenses 6,089.42 10.12 49,555.44 13.25

Rent Expense 930.00 1.55 4,533.00 1.21

Depr. Expense Off. Eqpt. 1,584.48 2.63 8,942.97 2.39
Depr. Expense Off. Furn. 263.13 0.44 1,491.21 0.40
Misc. General Expense 80.00 0.13 412.20 0.11
Office Salary Expense 2,940.00 4.89 14,917.74 3.99
Insurance Expense 350.00 0.58 1,022.00 0.27
Telephone Expense 507.00 0.84 1,897.46 0.51
Heating & Lighting Exp. 601.25 1.00 2,522.58 0.67
Legal & Prof. Fees Exp. 350.00 0.58 4,275.00 1.14
------------- ------------- ------------- ----------
Total Administrative Expense 7,605.86 12.64 40,014.16 10.70
------------- ------------- ------------- ----------
Total Operating Expenses 13,695.28 22.77 89,569.60 23.94
------------- ------------- ------------- ----------
Net Income from Operations 8,108.72 13.48 36,229.52 9.68

Other Revenue

Interest Income 85.35 0.14 274.45 0.07

Other Expense

Interest Expense 104.00 0.17 1,545.68 0.41

------------- ------------- ------------- ----------
Net Income 8,090.07 13.45 34,958.29 9.34
============= ============= ============= ==========

Savoy Merchandise Co.

Statement of Owner's Equity
For Period Ended 11/30/13

Emily Madigan, Capital (Beg. of Period) 306,050.60

Emily Madigan, Drawing -15,600.00
Net Income 30,865.09
-------------
Emily Madigan, Capital (End of Period) 321,315.69
=============
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 6 - Manual Page 19 7/25/2023

Savoy Merchandise Co.

Balance Sheet
11/30/13

Assets

Cash 42,645.68
Accounts Receivable 61,988.54
Merchandise Inventory 133,300.00
Prepaid Insurance 2,952.30
Supplies 2,192.00
-------------
Total Current Assets 243,078.52

Vehicles 61,700.00
Accum. Depr. Vehicles -6,459.71
Office Equipment 86,998.50
Accum. Depr. Office Eqpt. -7,599.55
Office Furniture 22,466.49
Accum. Depr. Office Furn. -1,340.07
-------------
Total Plant Assets 155,765.66
-------------
Total Assets 398,844.18
=============

Liabilities

Accounts Payable 46,736.17

Sales Tax Payable 483.32
-------------
Total Current Liabilities 47,219.49

Note Payable 30,309.00

-------------
Total Long Term Liabilities 30,309.00
-------------
Total Liabilities 77,528.49

Owner's Equity

Emily Madigan, Capital 306,050.60

Emily Madigan, Drawing -15,600.00
Net Income 30,865.09
-------------
Total Owner's Equity 321,315.69
-------------
Total Liabilities & Equity 398,844.18
=============

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Chapter 6 - Manual Page 20 7/25/2023

Savoy Merchandise Co.

Depreciation Schedules
As Of 11/30/13

SL DDB MACRS
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Chapter 6 - Manual Page 21 7/25/2023

Annual Annual Annual

Year Deprec. Deprec. Deprec.
(225) Web Server 2013 $95.33 $206.33 $619.00
Acquired on 11/25/13 2014 $572.00 $1,155.47 $990.40
Depreciation Methods 2015 $572.00 $693.28 $594.24
Useful Life = 5 2016 $572.00 $415.97 $356.54
Original Cost = 3,095.00 2017 $572.00 $249.58 $356.54
Salvage Value = 235.00 2018 $476.67 $124.79 $178.28

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Chapter 6 - Manual Page 22 7/25/2023

MEMORANDUM
TO: Manager, Accounting Department

FROM: Your name

DATE: (Today's Date)

SUBJECT: Depreciation Schedule Comparisons

As per your request, the following table depicts a comparison of the

straight-line, double declining-balance, and MACRS methods of depreciation
for Asset No. 225-Web Server.

SL DDB MACRS
Annual Annual Annual
Year Deprec. Deprec. Deprec.
(225) Web Server 2013 $95.33 $206.33 $619.00
Acquired on 11/25/13 2014 $572.00 $1,155.47 $990.40
Depreciation Methods 2015 $572.00 $693.28 $594.24
Useful Life = 5 2016 $572.00 $415.97 $356.54
Original Cost = 3,095.00 2017 $572.00 $249.58 $356.54
Salvage Value = 235.00 2018 $476.67 $124.79 $178.28

Student responses to the Internet activity will vary.

AUDIT QUESTIONS 6-B

1. $18,000.00
2. $225.00
3. $171,164.99
4. November 10, 2013
5. $194.17
6. $1,115.70
7. Debit Credit
Depr. Expense Vehicles $1,070.00
Accum. Depr.Vehicles $1,070.00
Depr. Expense Off. Eqpt. $1,584.48
Accum. Depr. Office Eqpt. $1,584.48
Depr. Expense Off. Furn. $263.13
Accum. Depr. Office Furn. $263.13
8. $21,804.00
9. 23.94%
10. $321,315.69
11. $77,528.49
12. double declining-balance
13. straight-line

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Chapter 6 - Manual Page 23 7/25/2023

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.