On January 1, 2007, Kenyan Company had Notes Receivable of $11,000. The note receivable is from Brennan Company. It is a 4-month, 9% note dated December 31, 2006. During the year the following selected transactions occurred (Kenyan Company uses a periodic inventory system.).

Jan. 5 Sold $12,000 of merchandise to Dorfner Company, terms n/15.
20 Accepted Dorfner Company's $12,000, 3-month, 9% note for balance due.
Feb. 18 Sold $5,000 of merchandise to Cheng Company and accepted Cheng's $5,000, 6-month, 10% note for the amount due.
Apr. 20 Collected Dorfner Company note in full.
30 Received payment in full from Brennan Company on the amount due.
May 25 Accepted Ardan Inc.'s $9,000, 6-month, 8% note in settlement of a past-due balance on account.
Aug. 18 Received payment in full from Cheng Company on note due.
Sept. 1 Sold $8,000 of merchandise to Charles Company and accepted an $8,000, 6-month, 10% note for the amount due.







Instructions
Journalize the transactions.

(Points: 0.0)
Blue Highway Bus Lines purchased a bus on January 1, 2007, at a cost of $120,000. Over its 4-year useful life, the bus is expected to be driven 160,000 miles. Salvage value is expected to be $8,000.

Instructions
a. Compute the annual depreciation cost using the straight-line method of depreciation.

b. Compute the annual depreciation costs using the unit-of-activity method assuming actual mileage was: 2007, 40,000; 2008, 52,000; 2009, 41,000; and 2010, 27,000.

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# The most common method of depreciating assets for financial statement purposes is the straight-line method. Under this depreciation method, the depreciation for each full year is the same amount.
# Straight Line Depreciation Calculation
(Purchase Price of Asset - Approximate Salvage Value) ÷ Estimated Useful Life of Asset

Online Accounting Software

Units of activity will be started the same way as the straight-line method in that you take the cost minus the salvage value to get the depreciable base then divide that number by the total miles to be driven over the life of the asset to get the depreciable rate per mile. Then for each year take that number times the miles driven to get your depreciation expense for the year.