Questions $3(32$ Marks$)$

Part I $(18$ marks$)$

Pacific Industries purchased a delivery truck on $5$ May $2023$ at a cost of $$848,000.$ The estimated useful life of the truck was $5$ years and estimated residual value was $$24,000.$ The truck was estimated to drive for $100,000$ miles during its useful life. Workings are required for the answers below.

$($a$)$ Compute the depreciation expense of the truck at the year$-$end on $31$ December for $2023$ and $2024$ by using the methods below $($round your answers to nearest dollar$)$:

$($i$)$ Straight$-$line $($with half$-$year convention$),$

$($ii$)150\%-$declining$-$balance $($calculated to the nearest whole month$),$

$($iii$)$ Unit$-$of$-$output $($number of miles driven: $16,000$ in $2023$; $20,000$ in $2024).$

$(\backslash$left$.$ & $($ii$)150\%-$declining$-\backslash$

balance Method$\backslash$end$\{$array$\}\backslash$right$\}\backslash$left$.)$

$\backslash$table$[[($iii$)$ Units$-$of$-$output$],[$Method$]]\backslash$right$\backslash$rvert$,$

$(18$ marks$)$

Part II $(12$ marks$)$

On $6$ September $2023,$ Macy, Inc. purchased an office computer for $$125,000$ with an estimated useful of $8$ years and an estimated residual value $$15,000.$ On $23$ October $2024,$ the Company sold the computer for $$110,000$ cash. The Company uses straight$-$line depreciation method with half$-$year convention and adjusts its accounts annually with the year$-$end on $31$ December. Prepare the following journal entries $($show your workings$)$:

Required:

$($a$)$ Prepare the journal entries to update the deprecation for $2024.$

$(4$ marks$)$

$($b$)$ Prepare the journal entry to dispose the said computer.

$(8$ marks$)$

Part III $(2$ marks$)$

Macy, Inc. purchased an office furniture on $1$ October $2024$ at a list price of $$12,000,$ with a $10\%$ discount received. Payment will be made in $36$ monthly instalments of $$320,$ which include $$720$ in interest charges. $$1,080$ sales tax was paid in addition to the net purchase price. The company also paid delivery charges of $$850$ and disposal fee of $$600$ to remove the old furniture from the office.

Compute the acquisition cost of Macy's new office furniture.

$(2$ marks$)$

$$END OF ASSIGNMENT $2$

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