Blue Hen Company started their operations Jan. 1, 2010. Blue Hen Company prepare
ID: 2492796 • Letter: B
Question
Blue Hen Company started their operations Jan. 1, 2010. Blue Hen Company prepares annual financial statements every December 31. On December 31, 2011 Blue Hen Company prepared the following Balance Sheet:
Assets
Cash 5,000
Accounts Receivable 1000
Equipment (less 100 AD) 900
Liabilities
Accounts Payable 1500
Equity
Common Stock 2000
Retained Earnings 3,400
Other Information:
• The Equipment has a 10 year life and No salvage value.
Transactions for 2012:
• July 1 – Issued common stock for $1,500.
• November 1 – Earned $1,000 on account for providing services to customers
• December 1 - Incurred $3000 in Operating Expenses on account.
• December 1 – Collected $500 cash from customers as payment on account
• Purchased Land for $2,000 cash.
• December 15 – Declared and paid a $50 dividend.
• Assume that Blue Hen pays no taxes.
• Remember to record depreciation for 2012
What should Blue Hen report for the book value of the Equipment on the December 31, 2012 balance sheet?
a. 900'
b. 1,000
c. None of these are correct
d. 800
e. 1,100
Explanation / Answer
Details Amt $ Balance as on Dec 31.2011. Equipment 1,000 Less Accumulated Depreciation (100) Book Value of Equipment as on Dec 31.2011.. 900 Equipment Cost 1,000 Depreciable value 1,000 Useful life in years 10 Annual SL depreciation 100 Depreciation for 2012= 100 Equipment balance as on Dec 31.2012. Equipment 1,000 Less Accumulated Depreciation (200) Book Value of Equipment as on Dec 31.2012 800 So option d. is correct.