E8-5 LO8-2, 8-3 Determining Financial Statement Effects of an Asset Acquisition and Depreciation (Straight-Line Deprecia

[answerhappygod]

E8-5LO8-2, 8-3
Determining Financial Statement Effects of an AssetAcquisition and Depreciation(Straight-Line Depreciation)Steve’s Outdoor Company purchased a new delivery van on January 1for $45,000 plus $3,800 in salestax. The company paid $12,800 cash on the van (including the salestax), signing an 8 percent note for the$36,000 balance due in nine months (on September 30). On January 2,the company paid cash of $700to have the company name and logo painted on the van. On September30, the company paid the balancedue on the van plus the interest. On December 31 (the end of theaccounting period), Steve’s Outdoorrecorded depreciation on the van using the straight-line methodwith an estimated useful life of 5 years andan estimated residual value of $4,500.Required (round all amounts to the nearest dollar):1. Indicate the effects (accounts, amounts, and + or -) of eachtransaction (on January 1, 2, andSeptember 30) on the accounting equation. Use the followingschedule:
Date Assets = Liabilities +Stockholders’ Equity
2. Compute the acquisition cost of the van.3. Compute the depreciation expense to be reported for Year1.4. What impact does the interest paid on the 8 percent note have onthe cost of the van? Under whatcircumstances can interest expense be included in acquisitioncost?5. What would be the net book value of the van at the end of Year2?