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Misc. Accounting Problems




Question;Question 8;Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $245,030 at both cost and market value. At December 31, 2013, the inventory was $327,470 at cost and $308,005 at market value. Prepare the necessary December 31 entry under;(a);the cost of goods sold method;Description/Account;Debit;Credit;InventoryCashLoss due to market decline of inventorySalesAllowance to reduce inventory to marketGain due to market increase of inventoryCost of goods sold;CashSalesLoss due to market decline of inventoryInventoryGain due to market increase of inventoryCost of goods soldAllowance to reduce inventory to market;(b);the loss method;Description/Account;Debit;Credit;InventoryCost of goods soldAllowance to reduce inventory to marketSalesGain due to market increase of inventoryCashLoss due to market decline of inventory;CashAllowance to reduce inventory to marketLoss due to market decline of inventoryInventoryCost of goods soldSalesGain due to market increase of inventory;Question 9;Boyne Inc. had beginning inventory of $15,360 at cost and $25,600 at retail. Net purchases were $153,600 at cost and $217,600 at retail. Net markups were $12,800, net markdowns were $8,960, and sales were $200,960. Compute ending inventory at cost using the conventional retail method.(Round computation for cost-to-retail ratio percentage and answer to 0 decimal places, e.g. 25,250.);Ending inventory;$;Question 10;(Gross Profit Method);Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.;Inventory, May 1;$201,600;Purchases (gross);806,400;Freight-in;37,800;Sales;1,260,000;Sales returns;88,200;Purchase discounts;15,120;(a);Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.;Inventory;$;(b);Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.;Inventory;$;Question 11;Previn Brothers Inc. purchased land at a price of $29,030. Closing costs were $3,350. An old building was removed at a cost of $11,670. What amount should be recorded as the cost of the land?;$;Question 12;Garcia Corporation purchased a truck by issuing an $115,200, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.(Round answers to 0 decimal places, e.g. 15,510. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Hint: Use tables in text.);Description/Account;Debit;Credit;Notes receivableDepreciation expenseTruckDiscount on notes payableCashNotes payable;Depreciation expenseCashTruckDiscount on notes payableNotes receivableNotes payable;Notes payableCashTruckDiscount on notes payableNotes receivableDepreciation expense;Question 13;Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $330,750. The estimated fair values of the assets are land $63,000, building $231,000, and equipment $84,000. At what amounts should each of the three assets be recorded?(Note: Do not round the computation of the % of total.);Recorded Amount;Land;$;Building;$;Equipment;$;Question 14;Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $102,000. The common stock is actively traded at $49 per share. Prepare the journal entry to record the acquisition of the land.(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.);Description/Account;Debit;Credit;Paid-in capital in excess of parLandCommon stockAdditional paid-in capitalCash;Paid-in capital in excess of parLandAdditional paid-in capitalCashCommon stock;Paid-in capital in excess of parCommon stockCashAdditional paid-in capitalLand;Question 15;Navajo Corporation traded a used truck (cost $23,000, accumulated depreciation $20,700) for a small computer worth $4,255. Navajo also paid $1,150 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.);Description/Account;Debit;Credit;TruckAccumulated depreciationCashGain on disposal of truckComputer;Accumulated depreciationTruckCashGain on disposal of truckComputer;Gain on disposal of truckTruckAccumulated depreciationComputerCash;TruckGain on disposal of truckCashComputerAccumulated depreciation;ComputerTruckCashGain on disposal of truckAccumulated depreciation;Question 16;Mehta Company traded a used welding machine (cost $9,180, accumulated depreciation $3,060) for office equipment with an estimated fair value of $5,100. Mehta also paid $3,060 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.);Description/Account;Debit;Credit;Gain on disposal of machineAccumulated depreciationDepreciation expenseOffice equipmentLoss on disposal of machineMachineCash;Loss on disposal of machineOffice equipmentDepreciation expenseGain on disposal of machineMachineAccumulated depreciationCash;Office equipmentDepreciation expenseLoss on disposal of machineMachineGain on disposal of machineAccumulated depreciationCash;MachineGain on disposal of machineOffice equipmentAccumulated depreciationLoss on disposal of machineCashDepreciation expense;Gain on disposal of machineCashOffice equipmentLoss on disposal of machineMachineAccumulated depreciationDepreciation expense;Question 17;Depreciation is normally computed on the basis of the nearest;day and to the nearest dollar.;full month and to the nearest cent.;full month and to the nearest dollar.;day and to the nearest cent.;Question 18;Fernandez Corporation purchased a truck at the beginning of 2012 for $46,200. The truck is estimated to have a salvage value of $2,200 and a useful life of 176,000 miles. It was driven 25,300 miles in 2012 and 34,100 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.);2012;$;2013;$;Question 19;Lockhard Company purchased machinery on January 1, 2012, for $71,400. The machinery is estimated to have a salvage value of $7,140 after a useful life of 8 years.;(a);Compute 2012 depreciation expense using the double-declining balance method.;$;(b);Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012.(Round answer to 0 decimal places, i.e. 2,250.);$;Question 20;Jurassic Company owns machinery that cost $1,080,000 and has accumulated depreciation of $432,000. The expected future net cash flows from the use of the asset are expected to be $600,000. The fair value of the equipment is $480,000. Prepare the journal entry, if any, to record the impairment loss.;Description/Account;Debit;Credit;MachineryCashAccumulated depreciationDepreciation expenseLoss on impairment;Loss on impairmentMachineryCashDepreciation expenseAccumulated depreciation;Question 21;Everly Corporation acquires a coal mine at a cost of $503,600. Intangible development costs total $125,900. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $100,720), after which it can be sold for $201,440. Everly estimates that 5,036 tons of coal can be extracted. If 881 tons are extracted the first year, prepare the journal entry to record depletion.;Description/Account;Debit;Credit;Development costsRestoration costsInventoryAccumulated depletion;Restoration costsDevelopment costsAccumulated depletionInventory;Question 22;Francis Corporation purchased an asset at a cost of $57,800 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,780. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012?2017. (Round answers to 0 decimal places.);2012;$;2013;$;2014;$;2015;$;2016;$;2017;$;Question 23;Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $55,720. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion's journal entries to record the purchase of the patent and 2012 amortization.;Account/Description;Debit;Credit;PatentsPatent amortization expenseAccumulated amortizationAccounts payableCashAccounts receivable;Accounts receivableAccumulated amortizationCashPatent amortization expensePatentsAccounts payable;(To record purchase of patent.);Accounts payablePatent amortization expensePatentsCashAccumulated amortizationAccounts receivable;Accumulated amortizationCashPatent amortization expenseAccounts receivablePatentsAccounts payable;(To record amortization.);Question 24;Karen Austin Corporation has capitalized software costs of $789,700, and sales of this product the first year totaled $408,900. Karen Austin anticipates earning $954,100 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year.;(a);Compute the amount of software cost amortization for the first year using the percent of revenue approach.;$;(b);Compute the amount of software cost amortization for the first year using the straight-line approach.;$;Question 25;Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad's offer. The Railroad's 2012 financial statements should include the following related to the incident;creation of a liability only.;disclosure in note form only.;recognition of a loss only.;recognition of a loss and creation of a liability for the value of the land.;Question 26;Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $66,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,350. On July 3, Roley returned damaged goods and received credit of $6,600. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley.(For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.);Date;Description/Account;Debit;Credit;July 1;Purchase discountsAccounts payableCashPurchase returns and allowancesPurchases;Accounts payablePurchasesPurchase returns and allowancesPurchase discountsCash;Freight-in;Purchase discountsCashPurchasesAccounts payablePurchase returns and allowances;July 3;CashPurchase returns and allowancesPurchase discountsAccounts payablePurchases;Purchase discountsAccounts payablePurchase returns and allowancesCashPurchases;July 10;Accounts payablePurchase discountsCashPurchasesPurchase returns and allowances;CashPurchase discountsPurchasesAccounts payablePurchase returns and allowances;Purchase returns and allowancesCashAccounts payablePurchase discountsPurchases;Question 27;Takemoto Corporation borrowed $69,600 on November 1, 2012, by signing a $71,166, 3-month, zero-interest-bearing note. Prepare Takemoto's November 1, 2012, entry, the December 31, 2012, annual adjusting entry, and the February 1, 2013, entry.(For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.);Date;Description/Account;Debit;Credit;11/1/12;Interest payableDiscount on notes payableCashNotes payableNotes receivableInterest expense;Discount on notes payableNotes receivableCashNotes payableInterest payableInterest expense;Notes receivableInterest payableNotes payableDiscount on notes payableInterest expenseCash;12/31/12;CashNotes receivableDiscount on notes payableNotes payableInterest expenseInterest payable;Notes receivableInterest payableInterest expenseCashNotes payableDiscount on notes payable;2/1/13;Discount on notes payableNotes payableInterest expenseNotes receivableInterest payableCash;Discount on notes payableCashInterest expenseNotes payableNotes receivableInterest payable;Discount on notes payableNotes payableNotes receivableInterest expenseInterest payableCash;Cash;Question 28;Whiteside Corporation issues $675,000 of 9% bonds, due in 10 years, with interest payablesemiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. (Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.);$;Question 29;Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $35,340 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $19,700 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $180,427. Prepare Lost Ark's January 1, 2012, journal entries.;Description;Debit;Credit;Leased Machinery Under Capital LeasesRent ExpenseLease LiabilityMachineryInterest ExpenseInterest PayableLease ReceivableCash;$;Lease ReceivableCashLease LiabilityInterest PayableLeased Machinery Under Capital LeasesMachineryInterest ExpenseRent Expense;$;(To record the lease);Lease LiabilityInterest ExpenseLeased Machinery Under Capital LeasesRent ExpenseCashInterest PayableLease ReceivableMachinery;$;MachineryInterest PayableRent ExpenseCashInterest ExpenseLease LiabilityLease ReceivableLeased Machinery Under Capital Leases;$;(To record first lease payment);Question 30;On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $27,650 and immediately leased it back. The truck was carried on Irwin's books at $21,200. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,670 at the end of each year. The appropriate rate of interest is 12%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin's 2012 journal entries.(Round your answer to the nearest dollar eg 58,591.For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.);Date;Description;Debit;Credit;Jan. 1;Depreciation ExpenseLease LiabilityLeased EquipmentAccumulated DepreciationInterest ExpenseCashTruckUnearned Profit on Sale-Leaseback;$;Accumulated DepreciationCashUnearned Profit on Sale-LeasebackTruckLeased EquipmentInterest ExpenseDepreciation ExpenseLease Liability;$;CashTruckLeased EquipmentLease LiabilityUnearned Profit on Sale-LeasebackAccumulated DepreciationDepreciation ExpenseInterest Expense;$;(To record the sale);Jan. 1;Leased EquipmentDepreciation ExpenseInterest ExpenseAccumulated DepreciationTruckUnearned Profit on Sale-LeasebackCashLease Liability;$;Unearned Profit on Sale-LeasebackLease LiabilityTruckCashAccumulated DepreciationInterest ExpenseLeased EquipmentDepreciation Expense;$;(To record the leaseback);Dec. 31;Lease LiabilityInterest ExpenseDepreciation ExpenseAccumulated DepreciationCashTruckUnearned Profit on Sale-LeasebackLeased Equipment;$;CashLeased EquipmentTruckDepreciation ExpenseUnearned Profit on Sale-LeasebackInterest ExpenseLease LiabilityAccumulated Depreciation;$;(To record depreciation);Dec. 31;Lease LiabilityUnearned Profit on Sale-LeasebackInterest ExpenseAccumulated DepreciationTruckDepreciation ExpenseCashLeased Equipment;$;Leased EquipmentTruckAccumulated DepreciationDepreciation ExpenseLease LiabilityInterest ExpenseCashUnearned Profit on Sale-Leaseback;$;Dec. 31;Leased EquipmentTruckDepreciation ExpenseUnearned Profit on Sale-LeasebackAccumulated DepreciationCashInterest ExpenseLease Liability;$;CashDepreciation ExpenseTruckAccumulated DepreciationUnearned Profit on Sale-LeasebackLeased EquipmentLease LiabilityInterest Expense;$;Accumulated DepreciationLease LiabilityDepreciation ExpenseInterest ExpenseTruckUnearned Profit on Sale-LeasebackCashLeased Equipment;$;(To record first lease payment)


Paper#44228 | Written in 18-Jul-2015

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