ACC/557 Homework 3 Chapters 9 and 10
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ACC/557 Homework 3 Chapters 9 and 10
Due Week 6 and worth 70 points
Directions: Answer the following questions on a separate
Microsoft Word or Excel document. Explain how you reached the answer or show
your work if a mathematical calculation is needed, or both. Submit your
assignment using the assignment link in Blackboard.
Exercises
E9-9. Presented below are selected transactions at Ridge Company for
2015.
Jan. 1
Retired a piece of machinery that was purchased on January 1, 2005. The machine
cost $62,000 on that date. It had a useful life of 10 years with no salvage
value.
June 30
Sold a computer
that was purchased on January 1, 2012. The computer cost $45,000. It had a
useful life of 5 years with no salvage value. The computer was sold for
$14,000.
Dec. 31
Discarded a
delivery truck that was purchased on January 1, 2011. The truck cost $33,000.
It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries required on the above dates, including
entries to update depreciation, where applicable, on assets disposed of. Ridge
Company uses straight-line depreciation. (Assume depreciation is up to date as
of December 31, 2014.)
E9-11. On July 1, 2015, Friedman Inc. invested $720,000 in a mine
estimated to have 900,000 tons of ore of uniform grade. During the last 6
months of 2015, 100,000 tons of ore were mined and sold.
Instructions
1. Prepare the journal entry to record depletion
expense.
2. Assume that the 100,000 tons of ore were
mined, but only 80,000 units were sold. How are the costs applicable to the
20,000 unsold units reported?
E10-12. Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on
January 1, 2015. The bonds pay interest twice a year.
Instructions
1. (1) Prepare the journal entry to record the
issuance of the bonds.
(2) Compute the total cost of borrowing for these bonds.
105.
Repeat the
requirements from part (a), assuming the bonds were issued at 105.
E10-15.Jernigan Co. receives $300,000 when it issues a $300,000, 10%,
mortgage note payable to finance the construction of a building at December 31,
2015. The terms provide for semiannual installment payments of $25,000 on June
30 and December 31.
Instructions
Prepare the journal entries to record the mortgage loan and the
first two installment payments.
Problems
P9-7A.The intangible assets section of Sappelt Company at December 31,
2015, is presented below.
The patent was acquired in January 2015 and has a useful life of
10 years. The franchise was acquired in January 2012 and also has a useful life
of 10 years. The following cash transactions may have affected intangible
assets during 2016.
Jan. 2
Paid
$27,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.–June Developed a
new product, incurring $140,000 in research and development costs. A patent was
granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1
Paid $50,000 to an
extremely large defensive lineman to appear in commercials advertising the
company’s products. The commercials will air in September and October.
Oct. 1
Acquired a franchise for $140,000. The franchise has a useful life of 50 years.
Instructions
1. Prepare journal entries to record the
transactions above.
2. Prepare journal entries to record the 2016
amortization expense.
3. Prepare the intangible assets section of the
balance sheet at December 31, 2016.
P10-1A.On January 1, 2015, the ledger of Accardo Company contains the
following liability accounts.
Accounts Payable
$52,000
Sales Taxes
Payable
7,700
Unearned Service Revenue
16,000
During January, the following selected transactions occurred.
Jan. 5 Sold
merchandise for cash totaling $20,520, which includes 8% sales taxes.
12Performed services for customers who had made advance payments
of $10,000. (Credit Service Revenue.)
14Paid state revenue department for sales taxes collected in
December 2014 ($7,700).
20Sold 900 units of a new product on credit at $50 per unit,
plus 8% sales tax.
21Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000
note.
25Sold merchandise for cash totaling $12,420, which includes 8%
sales taxes.
Instructions
1. Journalize the January transactions.
2. Journalize the adjusting entry at January 31
for the outstanding note payable. (Hint: Use one-third of a month for the
Girard Bank note.)
3. Prepare the current liabilities section of the
balance sheet at January 31, 2015. Assume no change in accounts payable.
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