Question

Gourmet Shop purchased cash registers on April 1 for $12,000. If this asset has an estimated useful life of four years, what is the book value of the cash registers on May 31?a.$250.b.$3,000.c.$9,000.d.$11,500.

Answer 1

d.$11,500.

Step-by-step explanation:

The cash register was bought for 12,000 and it has a useful life of 4 years which is equal to 48 months. So to calculate how much it would depreciate each month we would divide 12,000 by 48. 12,000/48= 250.

So in this case from April 1 to May 31 is 2 months which means that the cash register was used for 2 months and would be depreciated over the use of 2 months.

1 month deprecation = 250

2 month deprecation = 250*2= 500

The depreciation for 2 months is 500 and in order to find the book value at May 31 we will subtract the depreciation over 2 months from the original price.

12,000-500=11,500