Assignment
Question 1
Hearty Fried Chicken bought equipment on January 2, 2010, for $27,000.The equipment was expected to remain in service 4 years and to perform 6,000 fry jobs. At the end of the equipment's useful life, Hearty estimates that its residual value will be$3,000. The equipment performed 600 jobs the first year, 1,800 the second year, 2,400 the third year, and 1,200 the fourth year.
Requirements
1. Prepare a schedule of depreciation expense per year for the equipment under the three depreciation methods. After two years under double-declining-balance depreciation, the company switched to the straight-line method. Show your computations. Note: 3 depreciation schedules must be prepared.
2. Which method tracks the wear and tear on the equipment most closely?
Requirement 1. Prepare a schedule of depreciation expense per year for the equipment under the three depreciation methods. Begin with straight-line depreciation.
Question 2
Peace Bank recently traded in office fixtures. Here are the facts:
Old fixtures: New fixtures:
Cost, $92,000 Cash paid, $103,000, plus the old fixtures
Accumulated depreciation,$75,000
Requirements
1. Record Peace Bank's trade-in of old fixtures for new ones.
2. Now let's change one fact and see a different outcome. Peace Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Peace Bank is aware that the new fixtures' market value is only $117,000. Now record the trade-in.
Requirement 1. Record
Peace Bank's trade-in of old fixtures for new ones.
Question 3
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 8 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 4 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 6 years. Record amortization for year 5.
Requirement 1.(a)Record the purchase of the patent.
Question 4
Consider the following note payable transactions of Concert Video Productions.
2011
May 1May 1 Purchased equipment costing $12,000 by issuing a one-year, 3% note payable.
Dec. 31 Accrued interest on the note payable.
2012
May 1May 1 Paid the note payable at maturity.
Requirement
1. Journalize the transactions for the company.
Requirement 1.Journalize the purchase of equipment costing $12,000 by issuing a one-year, 3% note payable.
Question 5
The accounting records of Earth and WaterEarth and Water Ceramics included the following at December31, 2011:
Estimated warranty payable
Beginning balance 3,000
In the past,Earth and Water's warranty expense has been 6% of sales. During 2012, Earth and Water made sales of $103,000 and paid $4,000 to satisfy warranty claims.
Requirements
1. Journalize Earth and Water's warranty expense and warranty cash payments during 2012. Explanations not required.
2. What balance of Estimated warranty payable will Earth and Water report on its balance sheet at December 31, 2012?
Requirement 1.Journalize the warranty expense.
Question 6
The following transactions of San FranciscoSan FranciscoPharmacies occurred during 2010 and 2011:
Data table
2010
Jan 9- Purchased computer equipment at a cost of $8,000, signing a six-month, 8% note payable for that amount.
29- Recorded the week's sales of $69,000, 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, 9% note payable that calls for $51,000 annual installment payments plus interest. Record the short-term and long-term portions of the note payable in two separate accounts.
July 9- Paid the six-month, 8% note, plus interest, at maturity.
Aug 31- Purchased inventory for $9,000, signing a six-month, 10% note payable.
Dec 31- Accrued warranty expense, which is estimated at 3% of sales of $605,000.
31- Accrued interest on all outstanding notes payable. Make a separate interest accrual for each note payable.
2011
Feb 28- Paid the first installment and interest for one year on the four-year note payable.
28- Paid off the 10% note plus interest at maturity.
Requirement
1. Journalize the transactions in San Francisco's general journal. Explanations are not required.
Requirement 1. Journalize the transactions in San Francisco's general journal. Explanations are not required.
First, journalize the purchase of computer equipment.
Question 7
Skylar Systems completed the following stock issuance transactions:
June 19 Issued 1,900 shares of $1 par common stock for cash of $13.50 per share.
July 3 Sold 260 shares of $2.00, no-par preferred stock for $13,000 cash.
11 Received equipment with market value of $22,000. Issued 9,000 shares of the $1 par common stock in exchange.
Requirements
1. Journalize the transactions. Explanations are not required.
2. How much paid-in capital did these transactions generate for Skylar Systems?
Requirement 1.Journalize the transactions. Explanations are not required.
Begin by journalizing the transaction from June 19.
Question 9
The charter for TVKXAS-TV,Inc. authorizes the company to issue 100,000 shares of $44,no-par preferred stock and 500,000 shares of common stock with $1 par value. During its start-up phase, KXAScompleted the following transactions:
Sept. 6- issued 250 shares of common stock to the promoters who organized the corporation, receiving cash of $7,000.
12- issued 400 shares of preferred stock for cash of $28,000
14- issued 1,100 shares of common stock in exchange for land valued at $17,000
30- closed net income of $31,000 into retained earnings
Requirements
1. Record the transactions in the journal.
2. Prepare the stockholders' equity section of the KXAS-TV balance sheet at September 30,, 2010.
Requirement 1.Record the transactions in the journal.
Question 10
B-Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes B-Mobileto issue 80,000shares of 7%, $150par preferred stock and 120,000shares of no-par common stock. B-Mobilecompleted the following transactions:
Dec
2 Issued 18,000 shares of common stock for equipment with a market value of $110,000
6 Issued 1,000 shares of preferred stock to acquire a patent with a market value of $150,000
9 Issued 10,000 shares of common stock for cash of $50,000
Requirements
1. Record the transactions in the journal.
2. Prepare the stockholders' equity section of the B-Mobile Wireless balance sheet at December 31. The ending balance of Retained earnings is $90,000.
Requirement 1.Record the transactions in the journal.
Record the Dec. 2 issuance of common stock.
Attachment:- Assignment.rar