Dryden Enterprises plan to use a van as rental property. The van
has a list price of $23,500.
Dryden obtained a 10% cash discount from the dealer. The van was
delivered FOB shipping
point, and Dryden paid an additional $250.00 for transportation
costs. Dryden also paid $2,600
for a custom accesory package to increase the van’s appeal as a
rental vehicle.

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Question: Dryden Enterprises plan to use a van as rental property. The van has a list price of $23,500. Dry…
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Cost of the van computation:
List price $23,500.00
Less: Cash Discount ($2,350.00)
Plus: Transportation Costs $250.00
Plus: Cost of Customization $2,600.00
Total $24,000.00

Life Cycle Phase 1
Dryden acquired $35,000 cash on January 1, 2013, by issuing common
stock.
Life Cycle Phase 2
Dryden brought the van on January 1, 2013, using funds from the
stock issue. The cost of the van
previously computed , was $24,000 cash.
Life Cycle Phase 3
Dryden rented the van to customers. The rent revenue is $8,000 cash
each year
At the end of each year Dryden adjusts its accounts to recognize
depreciation expense.
Use Straightline method to estimate depreciation.
Salvage Value: $4,000 Useful Life: 4 Years
D
Dryden retired the van from services on January 1,2017 selling it
for $4,500 cash.

Fill in the table for: Financial Statement under Units
of Production,Financial Statement under Double-declining-balance,
and Financial Statement under Straightline
depreciation

Income Statement

2013

2014

2015

2016

2017

Rent Revenue

Depreciation Expense

Operating Income

Gain on sale of van

Net income

Rent Revenue

Balance Sheet

Assets

Cash

Van

Accumulated depreciation

Total Assets

Stockholder’s Equity

Common Stock

Retained Earnings

Total Stockholder’s Equity

Statement of Cash flows

Operating Activities

Inflow from customers

Investing Activities

Outflow to purchase van

Inflow from sale of van

Financing activities

Inflow from stock issue

Net Change in Cash

Beginning cash balance

Ending cash balance

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