ACC 557 Homework 3 Chapters 9 and 10
ACC 557 Homework 3 Chapters 9
and 10
Due Week 6 and worth
70 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in Blackboard.
Exercises
E9-9. Presented below are selected transactions at
Ridge Company for 2015.
Jan. 1
Retired a piece of machinery that was purchased on January 1, 2005. The machine
cost $62,000 on that date. It had a useful life of 10 years with no salvage
value.
June 30
Sold a computer
that was purchased on January 1, 2012. The computer cost $45,000. It had a
useful life of 5 years with no salvage value. The computer was sold for
$14,000.
Dec. 31
Discarded a delivery
truck that was purchased on January 1, 2011. The truck cost $33,000. It was
depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries
required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Ridge Company uses straight-line
depreciation. (Assume depreciation is up to date as of December 31, 2014.)
E9-11. On July 1, 2015, Friedman Inc. invested
$720,000 in a mine estimated to have 900,000 tons of ore of uniform grade.
During the last 6 months of 2015, 100,000 tons of ore were mined and sold.
Instructions
1.
Prepare the journal
entry to record depletion expense.
2.
Assume that the
100,000 tons of ore were mined, but only 80,000 units were sold. How are the
costs applicable to the 20,000 unsold units reported?
E10-12. Whitmore Company issued $500,000 of 5-year,
8% bonds at 97 on January 1, 2015. The bonds pay interest twice a year.
Instructions
1.
(1) Prepare the
journal entry to record the issuance of the bonds.
(2) Compute the total
cost of borrowing for these bonds.
1.
Repeat the
requirements from part (a), assuming the bonds were issued at 105.
E10-15.Jernigan Co. receives $300,000 when it issues
a $300,000, 10%, mortgage note payable to finance the construction of a building
at December 31, 2015. The terms provide for semiannual installment payments of
$25,000 on June 30 and December 31.
Instructions
Prepare the journal
entries to record the mortgage loan and the first two installment payments.
Problems
P9-7A.The intangible assets section of Sappelt
Company at December 31, 2015, is presented below.
The patent was
acquired in January 2015 and has a useful life of 10 years. The franchise was
acquired in January 2012 and also has a useful life of 10 years. The following
cash transactions may have affected intangible assets during 2016.
Jan. 2
Paid
$27,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.–June
Developed a new product, incurring
$140,000 in research and development costs. A patent was granted for the
product on July 1. Its useful life is equal to its legal life.
Sept. 1
Paid $50,000 to an
extremely large defensive lineman to appear in commercials advertising the
company’s products. The commercials will air in September and October.
Oct. 1
Acquired a franchise for $140,000. The franchise has a useful life of 50 years.
Instructions
1.
Prepare journal
entries to record the transactions above.
2.
Prepare journal
entries to record the 2016 amortization expense.
3.
Prepare the intangible
assets section of the balance sheet at December 31, 2016.
P10-1A.On January 1, 2015, the ledger of Accardo
Company contains the following liability accounts.
Accounts Payable
$52,000
Sales Taxes
Payable
7,700
Unearned Service
Revenue 16,000
During January, the
following selected transactions occurred.
Jan.
5 Sold merchandise for
cash totaling $20,520, which includes 8% sales taxes.
12Performed services
for customers who had made advance payments of $10,000. (Credit Service
Revenue.)
14Paid state revenue
department for sales taxes collected in December 2014 ($7,700).
20Sold 900 units of a
new product on credit at $50 per unit, plus 8% sales tax.
21Borrowed $27,000
from Girard Bank on a 3-month, 8%, $27,000 note.
25Sold merchandise for
cash totaling $12,420, which includes 8% sales taxes.
Instructions
1.
Journalize the January
transactions.
2.
Journalize the
adjusting entry at January 31 for the outstanding note payable. (Hint: Use
one-third of a month for the Girard Bank note.)
3.
Prepare the current
liabilities section of the balance sheet at January 31, 2015. Assume no change
in accounts payable.
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