Week 2 Exercises

ACC/291 - 39188946 / Week Two Assignment

Question 6 At December 31, 2011, Jimenez Company reported the following as plant assets. Land Buildings $28,500,000 12,100,000 Less: Accumulated depreciation-buildings Equipment 48,000,000 5,000,000 Less: Accumulated depreciation-equipment Total plant assets

$4,000,000 16,400,000 43,000,000 $63,400,000

During 2012, the following selected cash transactions occurred. April 1 May 1 June 1 July 1 Dec. 31

Purchased land for $2,130,000. Sold equipment that cost $780,000 when purchased on January 1, 2008. The equipment was sold for $450,000. Sold land purchased on June 1, 2002, for $1,500,000. The land cost $400,000. Purchased equipment for $2,000,000. Retired equipment that cost $500,000 when purchased on December 31, 2002. No salvage value was received.

Correct. Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date Account/Description Debit Apr. 1 Land 2130000 Cash May 1 Depreciation expense 26000 Acc. Depreciation-Equipment (To record depreciation.) May 1 Cash 450000 Acc. Depreciation-Equipment 338000 Equipment Gain on disposal (To record sale of equipment.) June 1 Cash 1500000 Gain on disposal Land July 1 Equipment 2000000 Cash Dec. 31 Depreciation expense 50000 Acc. Depreciation-Equipment (To record depreciation.) Dec. 31 Acc. Depreciation-Equipment 500000 Equipment (To record retirement of equipment.) Correct.

Credit 2130000 26000

780000 8000

1100000 400000 2000000 50000

500000

Record adjusting entries for depreciation for 2012. Date Account/Description Dec. 31 Depreciation expense Acc. Depreciation-Buildings (To record building depreciation.) Dec. 31 Depreciation expense Acc. Depreciation-Equipment (To record equipment depreciation.)

Debit 570000

570000 4772000 4772000

Correct. Complete the plant assets section of Jimenez's balance sheet at December 31, 2012. (List in the same order as the partial balance sheet presented in the problem. Enter all amounts as positive amounts and subtract where necessary.) JIMENEZ COMPANY Balance Sheet (Partial) December 31, 2012 Plant Assets Land $ 5730000 Buildings $ 28500000 12670000 Less: Acc. Depreciation-Buildings 15830000 Equipment 48720000 9010000 39710000 Less: Acc. Depreciation-Equipment $ 61270000 Total plant assets Question Attempts: 2 of 3 used

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Print by: FELIX DEL ROSARIO ACC/291 - 39188946 / Week Two Assignment

Question 5 Beka Company owns equipment that cost $50,000 when purchased on January 1, 2008. It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years. Prepare Beka Company's journal entries to record the sale of the equipment in these four independent situations.

Correct. Sold for $28,000 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Account/Description Debit Credit Cash 28000 Accum. deprec.-Equipment 27000 Equipment 50000 Gain on disposal 5000 Correct.

Credit

Sold for $28,000 on May 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Account/Description Debit Credit Depreciation expense 3000 Accum. deprec.-Equipment 3000 (To update depreciation) Accum. deprec.-Equipment 30000 Cash 28000 Equipment 50000 Gain on disposal 8000 Correct. Sold for $11,000 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Account/Description Debit Credit Accum. deprec.-Equipment 27000 Loss on disposal 12000 Cash 11000 Equipment 50000 Correct. Sold for $11,000 on October 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Account/Description Debit Credit 6750 Depreciation expense Accum. deprec.-Equipment (To update depreciation) Accum. deprec.-Equipment Cash Loss on disposal Equipment

6750 33750 11000 5250 50000 Question Attempts: 1 of 3 used



Question 4 Your answer is correct. Presented below are selected transactions at Ingles Company for 2011. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value. (Assume depreciation is up to date as of December 31, 2010.) June 30 Sold a computer that was purchased on January 1, 2008. The computer cost $40,000. 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, 2007. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Ingles Company uses straight-line depreciation.(For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date Jan. 1 June 30

June 30

Dec. 31

Dec.31

Account/Description Accumulated depreciation-Machinery Machinery Depreciation expense Accumulated depreciation-Computer (To update depreciation) Accumulated depreciation-Computer Cash Computer Gain on disposal Depreciation expense Accumulated depreciation-Truck (To update depreciation) Accumulated depreciation-Truck Loss on disposal Delivery truck

Debit 62000 4000

28000 14000

6000

30000 9000

Question Attempts: 2 of 3 used



Question 3 Correct. Match the statement with the term most directly associated with it. Goodwill Amortization Intangible assets Franchise Research and development costs 1. Rights, privileges, and competitive advantages that result from the ownership of long-lived Intangible assets assets that do not possess physical substance. 2. The allocation of the cost of an intangible asset to expense in a rational and systematic Amortization manner. 3. A right to sell certain products or services, or use certain trademarks or trade names Franchise within a designated geographic area. 4. Costs incurred by a company that often lead to patents or new products. These costs must Research and development be expensed as incurred. costs 5. The excess of the cost of a company over the fair market value of the net assets acquired. Goodwill Question Attempts: 1 of 3 used



Question 2 Correct. Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows: buildings $1,100,000; accumulated depreciation-buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion-coal mine $108,000. Complete the partial balance sheet of Spain Company for these items. (List assets with smallest net book value first. Enter all amounts as positive amounts and subtract where necessary.) SPAIN COMPANY Balance Sheet (Partial) December 31, 2011 Property, plant, and equipment Coal mine $ 500000 108000 Less: Accumulated depletion $ 392000 Buildings 1100000 650000 450000 Less: Accumulated depreciation Total property, plant, and equipment Intangible assets Goodwill Question Attempts: 3 of 3 used



Question 1 The ledger of Hixson Company at the end of the current year shows Accounts Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.

Correct. If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible. Date Account/Description Debit Dec. 31 Bad debts expense 1400 Accounts receivable-Fell

Credit 1400

Correct. If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable. Date Account/Description Debit (1) Dec. 31 Bad debts expense 8100 Allowance for doubtful accounts (2) Dec. 31 Bad debts expense 9900 Allowance for doubtful accounts

Credit

Correct. If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable. Date Account/Description Debit (1) Dec. 31 Bad debts expense 6075 Allowance for doubtful accounts (2) Dec. 31 Bad debts expense 7400 Allowance for doubtful accounts

Credit

Question Attempts: 1 of 3 used


8100 9900

6075 7400

Week 2 Exercises

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