Intermediate Accounting-12th ED (KIESO, WEYGANDT, and WARFIELD)
Problem 1. Indicate where the following items would be shown on a balance sheet.
(a) A lien that was attached to the land when purchased.
(b) Landscaping costs.
(c) Attorney's fees and recording fees related to purchasing land.
(d) Variable overhead related to construction of machinery.
(e) A parking lot servicing employees in the building.
(f) Cost of temporary building for workers during construction of building.
(g) Interest expense on bonds payable incurred during construction of a building.
(h) Assessments for sidewalks that are maintained by the city.
(i) The cost of demolishing an old building that was on the land when purchased.
Problem 2: Cheetah Company purchased machinery on January 1, 2007, for $60,000. The machinery is estimated to have a salvage value of $6,000 after a useful life of 8 years. (a) Compute 2007 depreciation expense using the straight-line method. (b) Compute 2007 depreciation expense using the straight-line method assuming the machinery was purchased on September 1, 2007.
Problem 3: Battle Tank, Inc. had net sales in 2007 of $1,200,000. At December 31, 2007, before adjusting entries, the balances in selected accounts were: Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,100 credit. If Battle Tank estimates that 2% of its net sales will prove to be uncollectible, prepare the December 31, 2007, journal entry to record bad debt expense.
Problem 4: Rick Kleckner Corporation recorded a capital lease at $200,000 on January 1, 2008. The interest rate is 12%. Kleckner Corporation made the first lease payment of $35,947 on January 1, 2008. The lease requires eight annual payments. The equipment has a useful life of 8 years with no salvage value. Prepare Kleckner Corporation's December 31, 2008, adjusting entries.
Problem 5: Alanis Morrissette Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $30 each. During June, the company purchased 150 units at $30 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transactions.