Logo
Question DetailsNormal
$ 25.00
Part 1. Depreciation calculations from Chapter 10 using straight-line | Complete Solution
Question posted by
request

Part 1. Depreciation calculations from Chapter 10 using straight-line, units of production and double-declining balance. Accumulated depreciation balances, Net Book Values. Please use the following information to answer the next series of questions. Each correct answer is worth 4 points, or 40 total points for this part.

 

Due to age of production equipment, ACAP Enterprises purchased new equipment on January 1, 2012. The following information applies to this equipment.

 

  • Cost is $849,000
  • Estimated residual value is $49,000
  • Estimated useful life is 5 years
  • The equipment has estimated hours of use totaling 32,000 machine hours
  • In 2012 the equipment was used for 6,000 actual machine hours
  • In 2013 the equipment was used for 7,500 actual machine hours

 

HINT: To determine the correct answers for some of the questions related to 2013, you need to consider what happened in 2012. Pay close attention to the way residual (salvage) value is used with each method. SHOW YOUR WORK!

 

  1. What is the JE to record depreciation expense for 2012 if the Straight-line method is used?
  2. What is the (net) book value of the asset at the end of 2012 (assuming straight-line)?
  3. What is the balance in Accumulated Depreciation after 5 years (end of 2016) (assuming straight-line)?

**************

  1. What is the JE to record depreciation expense for 2012 if the units-of-production method is used?
  2. What is the (net) book value of the asset at the end of 2013 (assuming the units-of-production method)?
  3. What is the balance in Accumulated Depreciation after 2 years (end of 2013) (assuming units-of-production method)?

**************

  1. What is the JE to record depreciation expense for 2012 if the double-declining balance (DDB) is used?
  2. What is the (net) book value of the asset at the end of 2012 (assuming DDB)?
  3. What is the JE to record depreciation expense for 2013 if the double-declining balance (DDB) is used?
  4. What is the balance in Accumulated Depreciation after 2 years (end of 2013) (assuming DDB is used)?

 

Part 2. Journal entries to record the sale of plant assets. Chapter 11. Please prepare the following journal entries to record the disposal of plant assets. Each journal entry is worth 6 points (12 points)

Merrimac Commercial Ovens rents ovens to small bakeries on an hourly basis. It is time to replace some of the cooking and refrigeration equipment. The ovens are recorded at a cost of $96,000. Accumulated Depreciation is $61,000. A salvage dealer has offered to buy the ovens for $39,000 cash.

 

The refrigeration equipment has a recorded cost of $75,000, and accumulated depreciation is $70,000. The equipment can be sold for $3,500.

 

  1. Record the journal entry for the sale of the ovens
  2. Record the journal entry for the sale of the refrigeration equipment

 

HINT: You need to record a Gain or a Loss on the sale of the plant assets

 

Part 3. Issuing common stock (Chapter 12). Record journal entries for the following three events, for three different companies. Each journal entry is worth 6 points (18 total points)

 

3.1 The Miller Corporation is a public company. Recently, the company authorized the issuance of the sale of 1,000,000 shares of $5 par value common stock for $18 per share. Record the journal entry to record the sale of stock.

 

3.2 The Nexus Company is a new company. The company issued 50,000 shares of no-par stock for $22 per share. Record the journal entry to record the sale of stock.

 

3.3 Burning Candles Inc. has just formed by issuing stock. The major stockholders are 2 sisters. Carol has contributed land with a fair value of $40,000 in exchange for 10,000 shares of $1 par value common stock. Carol's sister, Beverly paid $60,000 in exchange for 15,000 shares of $1 par value common stock. Record the journal entry to record the sale of stock.

 

Part 4. Paying Dividends on Preferred stock (Chapter 13). Record journal entries for the declaration and subsequent payment of Dividends. Each journal entry is worth 6 points (12 total  Points)

 

On 1/5/14, the Winston Corporation declared dividends on its $100 par value, 2% preferred stock. Dividends will be paid to stockholders of record as of 2/15/15. Payment will be made on 3/1/14. Record the journal entries on 1/5/14 and 3/1/14. There are 200,000 shares outstanding.

 

Part 5. Purchase and resale of Treasury Stock (Chapter 13). Record journal entries for purchase and resale of Treasury stock. Each journal entry is worth 6 points (18 total points)

 

Use the following information to answer the next three questions. Samuelson Company purchased 20,000 shares of its stock for $25 per share on August 18, 2013. At that time, the company had $8,000CR in Paid in Capital from Treasury Stock, and a balance of $100,000CR in Retained Earnings. On November 10, 2013, the company sold 3,000 shares of the Treasury stock (cost $25), for $28 per share. On December 2, 2013 the company sold another 10,000 shares of the Treasury stock for $20 per share.

 

  1. Prepare the journal entry to record the August 18, 2013 purchase of Treasury stock
  2. Prepare the journal entry to record the November 10, 2013 sale of Treasury stock
  3. Prepare the journal entry to record the December 2, 2013 sale of Treasury stock (HINT: Retained Earnings is affected)

 

 

 

Quiz 3 – Answer Sheets

 

  1. What is the JE to record depreciation expense for 2012 if the Straight-line method is used?

 

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. What is the (net) book value of the asset at the end of 2012 (assuming straight-line)?

 

 

 

 

Show calculations

 

 

  1. What is the balance in Accumulated Depreciation after 5 years (end of 2016) (assuming straight-line)?

 

 

 

 

 

Show calculations

 

 

  1. What is the JE to record depreciation expense for 2012 if the units-of-production method is used?

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

 

  1. What is the (net) book value of the asset at the end of 2013 (assuming the units-of-production method)?

 

 

 

 

 

Show calculations

 

 

  1. What is the balance in Accumulated Depreciation after 2 years (end of 2013) (assuming units-of-production method)?

 

 

 

 

Show calculations

 

 

  1. What is the JE to record depreciation expense for 2012 if the double-declining balance (DDB) is used?

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. What is the (net) book value of the asset at the end of 2012 (assuming DDB)?

 

 

 

Show calculations

 

  1. What is the JE to record depreciation expense for 2013 if the double-declining balance (DDB) is used?

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. What is the balance in Accumulated Depreciation after 2 years (end of 2013) (assuming DDB is used)?

 

 

 

 

Show calculations

 

 

 

 

Part 2. Journal entries to record the sale of plant assets. Chapter 11. Please prepare the following journal entries to record the disposal of plant assets. Each journal entry is worth 6 points (12 points)

 

Merrimac Commercial Ovens rents ovens to small bakeries on an hourly basis. It is time to replace some of the cooking and refrigeration equipment. The ovens are recorded at a cost of $96,000. Accumulated Depreciation is $61,000. A salvage dealer has offered to buy the ovens for $39,000 cash.

 

The refrigeration equipment has a recorded cost of $75,000, and accumulated depreciation is $70,000. The equipment can be sold for $3,500.

 

  1. Record the journal entry for the sale of the ovens

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. Record the journal entry for the sale of the refrigeration equipment

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

 

HINT: You need to record a Gain or a Loss on the sale of the plant assets

 

 

 

Part 3. Issuing common stock (Chapter 12). Record journal entries for the following three events, for three different companies. Each journal entry is worth 6 points (18 total points)

 

3.1 The Miller Corporation is a public company. Recently, the company authorized the issuance of the sale of 1,000,000 shares of $5 par value common stock for $18 per share. Record the JE to record the sale of stock.

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

 

3.2 The Nexus Company is a new company. The company issued 50,000 shares of no-par stock for $22 per share. Record the journal entry to record the sale of stock.

 

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

 

 

3.3 Burning Candles Inc. has just formed by issuing stock. The major stockholders are 2 sisters. Carol has contributed land with a fair value of $40,000 in exchange for 10,000 shares of $1 par value common stock. Carol's sister, Beverly paid $60,000 in exchange for 15,000 shares of $1 par value common stock. Record the journal entry to record the sale of stock.

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

Part 4. Paying Dividends on Preferred stock (Chapter 13). Record journal entries for the declaration and subsequent payment of Dividends. Each journal entry is worth 6 points (12 total  Points)

 

On 1/5/14, the Winston Corporation declared dividends on its $100 par value, 2% preferred stock. Dividends will be paid to stockholders of record as of 2/15/15. Payment will be made on 3/1/14. Record the journal entries on 1/5/14 and 3/1/14. There are 200,000 shares outstanding.

 

Declaration of Dividends on 1/5/14

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

Payment of Dividends on 3/1/14

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

 

 

Part 5. Record JEs for purchase and resale of Treasury stock. Each journal entry is worth 6 points (18 total points). Use the following information to answer the next three questions. Samuelson Company purchased 20,000 shares of its stock for $25 per share on August 18, 2013. At that time, the company had $8,000CR in Paid in Capital from Treasury Stock, and a balance of $100,000CR in Retained Earnings. On November 10, 2013, the company sold 3,000 shares of the Treasury stock (cost $25), for $28 per share. On December 2, 2013 the company sold another 10,000 shares of the Treasury stock for $20 per share.

 

  1. Prepare the journal entry to record the August 18, 2013 purchase of Treasury stock

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. Prepare the journal entry to record the November 10, 2013 sale of Treasury stock

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

 

  1. Prepare the journal entry to record the December 2, 2013 sale of Treasury stock (HINT: Retained Earnings is affected)

 

 

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Show calculations here.

 

 

 

 

 

Available Solution
$ 25.00
Part 1. Depreciation calculations from Chapter 10 using straight-line | Complete Solution
  • This solution has not purchased yet.
  • Submitted On 05 May, 2015 11:22:53
Solution posted by
solution
Net book value = 689000 Show calculations 849000-160000 = 689000 1.3 What is the balance in Acc...
Buy now to view full solution.
closebutton

$ 629.35