Accounting 2

/in /by

To use the SLN function,

=sln(cost,salvage,life) and in this case take this number by 8/12

To use the DDB function in Excel,

=DDB(cost,salvage,life,period)

 
Accounting, 9e
E9-20 Partial year depreciation and sale of an asset
LO 2, 3 [10-15 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
On January 2, 2012, Repeat Clothing Consignments purchased showroom fixtures
for $11,000 cash, expecting the fixtures to remain in service for five years. Repeat
has depreciated the fixtures on a double-declining-balance basis, with zero residual
value. On October 31, 2013, Repeat sold the fixtures for $6,200 cash.
Requirements
1. Record both depreciation for 2013 and sale of the fixtures on October 31, 2013.
Test Your Knowledge
E9-20
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT
2013 Depreciation for 10 months:
Oct 31 Depreciation cost 4,400
11,000 X 2/5yr 4,400
Sale of fixtures:
Oct 31 6,200
6,200
Gain on sale of fixtures 1,800
Calculate 2012 depreciation: You can also use DDB function in excel:
DDB = $4,400 for 2012
DDB = $2,200 for 10 mo. 2013
Calculate 2013 depreciation
Gain is computed as follows:
Sale price of old fixtures $6,200
Book value of old fixtures: 0
Cost $11,000
Less: Accm depreciation Accm. Depr. 6,600
Gain on sale…………………………………………………. $1,800
15 points
 
Accounting, 9e
E9-24 Acquisition of patent, amortization, and change in useful life
LO 5 [10-15 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
Miracle Printers (MP) manufactures printers. Assume that MP recently paid $600,000
for a patent on a new laser printer. Although it gives legal protection for 20 years, the
patent is expected to provide a competitive advantage for only eight years.
Requirements
1. Assuming the straight-line method of amortization, make journal entries to
record (a) the purchase of the patent and (b) amortization for year 1.
2. After using the patent for four years, MP learns at an industry trade show that
another company is designing a more efficient printer. On the basis of this new
information, MP decides, starting with year 5, to amortize the remaining cost of
the patent over two remaining years, giving the patent a total useful life of six
years. Record amortization for year 5.
Test Your Knowledge
E9-24
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT
Req. 1 Purchase of patent
(a) Patent Cost 600,000
600,000
(b) Amortization for one year: 75,000
(Patent cost 600,000 X 1/8) 75,000
Req. 2 Amortization for year 5: 375,000 150,000
600,000/8 X 5yrs 375,000 150,000
Calculate book value
Orginal cost $600,000
Accm Depreciation:
Year 1 75,000
Year 2 150,000
Year 3 225,000
Year 4 $300,000
Book value at beg of Yr 5 $300,000
New estimated useful life remaining 2
New annual amortization $150,000
6 points Re-do
 
Accounting, 9e
E10-11 Journalizing current liabilities
LO 1 [15 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
Edmund O’Mally Associates reported short-term notes payable and salary payable
as follows:
2012 2011
Current liabilities (partial)
Short-term notes payable $16,400 $15,600
Salary payable 3,400 3,100
During 2012, O’Mally paid off both current liabilities that were left over from 2011,
borrowed money on short-term notes payable, and accrued salary expense.
Requirements
1. Journalize all four of these transactions for O’Mally during 2012.
Test Your Knowledge
E10-11
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT DEBIT CREDIT
2012 EDMUND O’MALLY ASSOCIATE ACCOUNT
Short term loan for liabilities payable Short Term Notes Payable 15600
Short Term Expense Payable Notes Payable for 2011 15,600 Cash 15600
Salary Expense Payable for 2011 3,100 Salary Payable 3100
Cash 3100
Cash 16400
Short Term Notes Payable for 2012 16,400 Short Trm Nts PayBl for ’12 16400
Salary Expense Payable for 2012 3,400 Salary Expense 3400
Salary Payable 3400
Re-do
 
Accounting, 9e
E10-13 Computing and recording gross and net pay
LO 3,4 [10-15 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
Henry Striker manages a Frosty Boy drive-in. His straight-time pay is $10 per hour,
with time-and-a-half for hours in excess of 40 per week. Striker’s payroll deductions
include withheld income tax of 8%, FICA tax of 7.65%, and a weekly deduction
of $5 for a charitable contribution to the United Fund. Striker worked 52
hours during the week.
Requirements
1. Compute Striker’s gross pay and net pay for the week. Carry amounts to the
nearest cent.
2. Journalize Frosty Boy’s wage expense accrual for Striker’s work. An explanation
is not required.
3. Journalize the subsequent payment of wages to Striker.
Test Your Knowledge
E10-13
Req. 1
Straight-time earnings for 40 hours (40 X $10) $400.00
Overtime pay for the next 12 hours: 180
Deductions:
Withheld income tax 8% 46.40
FICA tax 7.65% 44.37
United Fund contribution 5.00
Total deductions 95.77
Net pay $484.23
Req. 2
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT
Wage expense 580.00 Wage Expense
Wage expense payable 580.00 Wages Payable
Req. 3
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT DEBIT CREDIT
Wages payable 580.00 Wages payable 580.00
Income Tax payable 46.40 Employee Income Tax payable 46.40
Fica Tax payable 44.37 Fica Tax payable 44.37
United Fund Contribution 5 Employee United Fund Contribution 5
Employee Benefits payable 5.00 Employee Benefits payable 5.00
Cash 484.23 Cash 484.23
Re-do
 
Accounting, 9e
P9-29A Lump sum asset purchases, partial year depreciation, and impairments
LO 2,3 [20-25 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
Gretta Chung Associates surveys American eating habits. The company’s accounts
include Land, Buildings, Office equipment, and Communication equipment, with a
separate accumulated depreciation account for each asset. During 2012 and 2013,
Gretta Chung completed the following transactions:
2012
Jan 1 Traded in old office equipment with book value of $40,000 (cost of $132,000
and accumulated depreciation of $92,000) for new equipment. Chung also
paid $80,000 in cash. Fair value of the new equipment is $119,000.
Apr 1 Acquired land and communication equipment in a group purchase. Total
cost was $270,000 paid in cash. An independent appraisal valued the land
at $212,625 and the communication equipment at $70,875.
Sep 1 Sold a building that cost $555,000 (accumulated depreciation of $255,000
through December 31 of the preceding year). Chung received $370,000
cash from the sale of the building. Depreciation is computed on a
straight-line basis. The building has a 40-year useful life and a residual
value of $75,000.
Dec 31 Recorded depreciation as follows:
→Communication equipment is depreciated by the straight-line method over a
five-year life with zero residual value.
→Office equipment is depreciated using the double-declining-balance method over
five years with $2,000 residual value.
2013
Jan 1 The company identified that the communication equipment suffered significant
decline in value. The fair value of the communication equipment was
determined to be $55,000.
Requirements
1. Record the transactions in the journal of Gretta Chung Associates.
Test Your Knowledge
P9-29A
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT DEBIT CREDIT
2012
Jan. 1 Office equipment (new) 80,000 119,000
Cash 80,000 92,000
Depreciation expense of equiptment & books 132,000 Loss on Sale 1,000
Accumulated depreciation of equiptment & books Off. Eqp. Old 132,000
Cash 80,000
Apr. 1 Land 162,000 202,500
Equiptment 108,000 67,500
Cash 270,000 270,000
Sept. 1 Depreciation expense 300,000 8,000
Accumulated depreciation 255,000 8,000
Building 555,000
Sept. 1
Cash 370,000
Accumulated Depriciation 330,000 263,000
Loss on Sale 145,000 Gain on Sale 78,000
Building 555,000
Dec. 31 Communication Equipt. Expense 23,800 10,125
Accumulated Depreciation per year 23,800 10,125
(119000 x 1/5×12/12 –
Dec. 31 Depreciation Expense Office Equipment 8,282 47,600
Accumulated depreciation Office Equipment 8,282 47,600
(119000-2000) x 2/5 x 12/12
2013 Communication Equipt. Expense 23,800
Jan. 1 Accumulated Depreciation for 1 year 23,800
Communication Equiptment 119,000 2,375 Loss on impairment
Accumulated Depreciation 95,200 10,125 Acc. Depr. Equipment
Loss of Impairments for 1 year 11,000 12,500 Communic.Equip
New Fair Value for Communication Equiptment 55,000
Please Re-do
 
Accounting, 9e
P9-30A Natural resource accounting
LO 4 [15-20 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/02/13
McCabe Oil Company has an account titled Oil and gas properties. McCabe paid
$6,200,000 for oil reserves holding an estimated 500,000 barrels of oil. Assume the
company paid $510,000 for additional geological tests of the property and $490,000
to prepare for drilling. During the first year, McCabe removed 90,000 barrels of oil,
which it sold on account for $39 per barrel. Operating expenses totaled $850,000, all
paid in cash.
Requirements
1. Record all of McCabe’s transactions, including depletion for the first year.
Test Your Knowledge
P9-30A
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT DEBIT CREDIT
Jan-13 RESERVE HOLDINGS FOR 500000 Oil Barrels 6,200,000 Oil & Gas Property
6,200,000 Cash
Geological test of property 510,000 Oil & Gas Property
510,000 Cash
Drilling Expenses 490,000 Oil & Gas Property
490,000 Cash
90000 barrels of oil sold at @ $39.00 per Barrel 3,510,000 Accts. Receivable
3,510,000 Sales Revenue
Operating expenses paid in cash 850,000 Depletion Expense 1296000
850,000 Accumulate Depletion – Oil 1296000
Balance on the Ledger 840,000 Operating Expenses
840,000 Cash 850000
850000
Re-do
 
Accounting, 9e
P10-15A Journalizing liability transactions
LO 1, 2 [30-40 minutes]
Students please fill-in areas that are shaded
Student Name
Course Name
Student ID:
Date:
The following transactions of Denver Pharmacies occurred during 2011 and 2012:
2011
Jan 9 Purchased computer equipment at a cost of $9,000, signing a six-month,
6% note payable for that amount.
29 Recorded the week’s sales of $64,000, three-fourths on credit, and
one-fourth for cash. Sales amounts are subject to a 6% state sales tax.
Feb 5 Sent the last week’s sales tax to the state.
28 Borrowed $204,000 on a four-year, 10% note payable that calls for $51,000
annual installment payments plus interest. Record the current and
long-term portions of the note payable in two separate accounts.
Jul 9 Paid the six-month, 6% note, plus interest, at maturity.
Aug 31 Purchased inventory for $12,000, signing a six-month, 9% note payable.
Dec 31 Accrued warranty expense, which is estimated at 2% of sales of $603,000.
31 Accrued interest on all outstanding notes payable. Make a separate
interest accrual for each note payable.
2012
Feb 28 Paid the first installment and interest for one year on the four-year note
payable.
29 Paid off the 9% note plus interest at maturity.
Requirements
1. Journalize the transactions in Denver’s general journal. Explanations are not
required.
Test Your Knowledge
P10-15A
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT
2011
Jan 9 Computer Equipment: 9,000 Computer Equipment: 9,000
note payable (6% of 9000) 540 Short Ter Note payable (6%) 9,000
540 Wrong
Jan 29 Cash ($64,000 X 1/4 X 1.06) 16,960 Wrong
16,960 Wrong
Credit ($ 64,000 X 3/4 X 1.06) 50,880 Wrong
50,880 Wrong
Total Sales Tax (64,000 X 6%) 3,840 Wrong
Feb 5
Feb 28
Jul 9
Aug 31
Dec 31
31
Interest payable –
31
2012
Feb 28
Feb 28
Incomplete. Please Re-Do
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Accounting, 9e
P10-16A Journalizing liability transactions
LO 2 [20-25 minutes]
Students please fill-in areas that are shaded
Student Name Oscar Gibbons
Course Name Accounting 2
Student ID: 69193
Date: 10/2/13
The following transactions of Brooks Garrett occurred during 2012:
Apr 30 Garrett is party to a patent infringement lawsuit of $200,000. Garrett’s attorney
is certain it is remote that Garrett will lose this lawsuit.
Jun 30 Estimated warranty expense at 2% of sales of $400,000.
Jul 28 Warranty claims paid in the amount of $6,000.
Sep 30 Garrett is party to a lawsuit for copyright violation of $100,000. Garrett’s
attorney advises that it is probable Garrett will lose this lawsuit.
Dec 31 Garrett estimates warranty expense on sales for the second half of the year of
$500,000 at 2%.
Requirements
1. Journalize required transactions, if any, in Garrett’s general journal.
Explanations are not required.
2. What is the balance in Estimated warranty payable?
Test Your Knowledge
P10-16A
Req. 1
Journal
DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT
2012
Apr 30 Not required to enter No Entry Required
–
Jun 30 Warranty expense expense 8,000
Eswtimated Warranty Payable 8,000 Indent Explanations when recording credits
Jul 28 Estimated Warranty Claims payable 6,000 Estimated Warranty Payable
Cash 6,000
Sep 30 Copyright lawsuit expense Warranty expense 100,000 Loss for lawsuit expense
100,000 Estimateed lawsuit payable
Dec 31 Estimated Warranty expense 10,000 Warranty Expense
10,000 Estimated warranty payable
Req. 2 Re-do upper portion
Estimated warranty payable
Jul 28 6,000 Jun 30 8,000
Dec 31 10,000 Ok
End Bal 12,000

???

Page

??? (???)

11/19/2013, 09:17:54

Page /

Jennie

April 23

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"