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
a)
Prepare the journal entry to record
depletion expense.
b)
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
a)
(1) Prepare the journal entry to
record the issuance of the bonds.
(2)
Compute the total cost of borrowing for these bonds.
b)
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
a)
Prepare journal entries to record
the transactions above.
b)
Prepare journal entries to record
the 2016 amortization expense.
c)
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.
12
Performed 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
a)
Journalize the January transactions.
b)
Journalize the adjusting entry at
January 31 for the outstanding note payable. (Hint: Use one-third of a month
for the Girard Bank note.)
c)
Prepare the current liabilities
section of the balance sheet at January 31, 2015. Assume no change in accounts payable.
TUTORIAL PREVIEW
|
Jan. 1
|
Accumulated
Depreciation—Machinery
|
62,000
|
|
|
|
Machinery
|
|
62,000
|
|
|
|
|
|
|
June 30
|
Depreciation Expense
|
4,500
|
|
|
|
Accumulated Depreciation—
|
|
|
|
|
Computer ($45,000 X
1/5 X 6/12)
|
|
4,500
|
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