Problem:
Prepare an answer sheet with the following coumn headings. For each of the following trasactions or adjustments you are to indicate the effect of the transaction or adjustment on assets, liabilities and net income by entering for each account affected the account name and amount indicating wheather it is an addition or subtraction. transaction A. has been done as an illustration. Net income is not affeted by every transaction. In some cases, only one column may be affected because all of the specific accoutns affected by the transaction are included in that category.
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Assets |
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Liablilites |
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Net Income |
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recorded $200 |
Accumulated depreciation |
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Depreciation Expense |
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of depreciation |
-200 |
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-200 |
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expense |
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A. Recorded $200 of depreciation expense(already completed on excel sheet)
B. Sold land that had orginally cost $52,000 for $45,600 in cash.
C. Recorded a $272,000 payment for the cost of developing and registering a patent.
D. Recognized periodic amortization for the patent (in part c) using the maximum satutory useful life.
E. Capitalized $12,800 of cash expeditures made to extend the useful life of production equipment.
F. Expensed $7,200 of cash expenditures incurred for routine maintenance of production equipment.
G. Sold a used machine for $36,000 in cash. The machine originally cost $120,000 and had been depreciated for the first two years of its five-year useful life using the double declining balance method. (hint: you must compute the balance of the accumulated depreciation account before you can record the sale.)
H. Purchased a business for $1,280,000 in cash. The fair market values of the net assets acquired were as follows: land - $160,000. Buildings - $800,000. Equipment - $400,000 and long-term debt - $280,000.