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3 Account problem

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Question;Problem #1 Reese Corporation;Assume;that the following was shown on the balance sheet related to property, plant and;equipment on January 1, 2014;Total;PPE: $29,347;Less;Accum. Depr. 17,588;$11,759;Also assume;that a footnote says the following: ?property, plant, and equipment is depreciated;using the straight-line method.? Annual;depreciation expense is approximately $1,800.;1. Estimate;the average useful life of depreciable assets (assume no residual values).;2. Estimate the average age of depreciable;assets on January 1, 2014.;Problem # 2 Obtain Wal-Mart?s 2013 Annual Report;1. a) How much cash was received from the;sale (disposal) of property, plant, and equipment during 2013?;b) Assume the cost of the PPE sold during;2013 was $950M and the accumulated depreciation on PPE sold amounted to;$350M. What is the gain or loss on the;sale?;2. Assume that Wal-Mart;purchased equipment at the beginning of fiscal year 2009 for $480,000;cash. The equipment had an estimated;useful life of 8 years and a residual value of $30,000.;a. What would depreciation expense be for;year 3 under the straight-line method?;b. What would depreciation;expense be for year 3 under the double-declining balance method?;c. What is the first;year in which depreciation expense under the straight-line method is higher;than under the declining balance method?;d. Assume Wal-Mart uses;the straight-line depreciation method for its equipment. Also assume that at fiscal year-end 2013, Wal-Mart;sold the equipment purchased at the beginning of fiscal year 2009 for $200,000;cash. Prepare the journal entry to;record the sale of the equipment at year-end 2013.;3. a) What was the total current portion of;Wal-Mart?s long-term debt at January 31, 2013?;b) What;would have been the effect on working capital on January 31, 2013 if the;current portion of long-term debt had not been properly reclassified? State the direction and dollar amount.;4. Refer to the Note 6;(with respect to the total long-term debt only). Wal-Mart is scheduled to pay debt maturities;each fiscal year-end as indicated in the notes.;At January 31, 2013, what was the present value of Wal-Mart?s fourth;debt payment (due January 31, 2017)?;(assume an 8% interest rate).;Problem #3 Sayers;On December 31, 2013, Sayers Nissan issued;$3 million of 10-year, 10% debentures.;The market interest rate at issuance was 12%. Interest payments are semi-annual.;1. Compute the proceeds;from the issuance and prepare the journal entry to record the issuance.;2. Prepare the journal;entries to record the first two;semiannual interest payments, including any bond discount or premium;amortization.;3. Prepare the journal;entry to record payment at the maturity date.;4. Show how the;bond-related accounts would appear on the balance sheets as of December 31;2013, and June 30, 2014.

 

Paper#41508 | Written in 18-Jul-2015

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