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Manal Elkhoshkhany
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"On December 31, 2010, before the books were closed, the management

Resolved Question:

"On December 31, 2010, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three depreciable
assets."

1. Depreciable asset A was purchased January 2, 2007. It originally cost $540,000
and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally
expected to be useful for 10 years and have a zero salvage value. In 2010, the
decision was made to change the depreciation method from straight-line to sum-of-years'-digits, and
the estimates relating to useful life and salvage value remained unchanged.
2. Depreciable asset B was purchased January 3, 2006. It originally cost $180,000
and, for depreciation purposes, the straight-line method was chosen. The asset was originally
expected to be useful for 15 years and have a zero salvage value. In 2010, the
decision was made to shorten the total life of this asset to 9 years and to
estimate the salvage value at $3,000
3. Depreciable asset C was purchased January 5, 2006. The asset's original cost was $160,000
and this amount was entirely expensed in 2006. This particular asset has a 10-year useful life and no salvage value. The straight-line method was chosen for depreciation purposes.


Additional data:
1. Income in 2010 before depreciation expense amount to $400,000
2. Depreciation expense on assets other than A, B, and C totaled $55,000 in 2010.
3. Income in 2009 was reported at $370,000
4. Ignore all income tax effects.
5. 100,000 shares of common stock were outstanding in 2009 and 2010.

Instructions:
(a) Prepare all necessary entries in 2010 to record these determinations.

(1) Account title Amount
Account title Amount

Computations:
Cost of Asset A Amount
Less: Depreciation prior to 2010 Formula
Book value, January 1, 2010 Formula

Depreciation factor Number
Depreciation for 2010 Formula

(2) Account title Amount
Account title Amount
Computations:
Original cost Amount
Less: Accumulated depreciation Amount
Book value, January 1, 2010 Formula
Estimated salvage value Amount
Remaining depreciable base Formula

Remaining useful life 5
Depreciation expense 2010 Formula

(3) Account title Amount
Account title Amount
Account title Amount

Account title Amount
Account title Amount

(b) Prepare comparative retained earnings statements for Madrasa Inc. for 2009 and 2010. The
company had retained earnings of $200,000 at December 31, 2008.
MADRASA INC.
Comparative Retained Earnings Statements
For the Years Ended
2010 2009
Balance, January 1, as previously reported Amount
Add: Error in recording Asset C Amount
Retained earnings, January 1, as adjusted Amount Formula
Add: Net income Amount Amount
Retained earnings, December 31 Formula Formula

Amount expensed incorrectly in 2006 Amount
Depreciation to be taken to January 1, 2009 Amount
Prior period adjustment for income Formula

Income before depreciation expense 2010 Amount
Depreciation for 2010
Asset A Amount
Asset B Amount
Asset C Amount
Other Amount Formula
Income after depreciation expense Formula
Net income as reported Amount
Depreciation - Asset C Amount
Net income as adjusted Formula
Submitted: 2 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 2 years ago.

Hello and welcome to JA

 

 

Please advise your deadline as well as the name of the book you are using: Title, author's name, and edition

 

Thank you

Customer: replied 2 years ago.
I am using the 13th edition of Intermediate accounting by Kieso. I need to have this answer in the next couple of hours.
Expert:  Manal Elkhoshkhany replied 2 years ago.

Please click on the following link for the solutions:

 

http://www.box.com/s/u58gd09kp69qp5aqlean

 

 

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

 

Thank you

Manal Elkhoshkhany, Tutor
Category: Homework
Satisfied Customers: 9485
Experience: More than 5000 online tutoring sessions.
Manal Elkhoshkhany and 2 other Homework Specialists are ready to help you
Customer: replied 2 years ago.
Thank you so much. It took me some time to review the question and realize what I did wrong on my answers. I have some more questions for this week that I would like to send to you.
Expert:  Manal Elkhoshkhany replied 2 years ago.

Sure, but please make a new post for each question and advise the deadline

 

Thank you

Customer: replied 2 years ago.

Hi Business Tutor,
I just want to verify my answer on this question below. I have used you below and have been very happy. If you can help me on this that would be great. I need this by tomorrow and it is from Kieso Intermediate Accounting 13th Edition. Thank you.


The comparative balance sheets for Hinckley Corporation show the following information:
December 31
2010 2009
Cash $33,500 $13,000
Accounts receivable 12,250 10,000
Inventory 12,000 9,000
Investments 0 3,000
Building 0 29,750
Equipment 45,000 20,000
Patent 5,000 6,250
Totals $107,750 $91,000

Allowance for doubtful accounts $3,000 $4,500
Accumulated depreciation on equipment 2,000 4,500
Accumulated depreciation on building 0 6,000
Accounts payable 5,000 3,000
Dividends payable 0 5,000
Notes payable, short-term (nontrade) 3,000 4,000
Long-term notes payable 31,000 25,000
Common stock 43,000 33,000
Retained earnings 20,750 6,000
Totals $107,750 $91,000

Additional data related to 2010 are as follows:
1. Equipment that had cost $11,000 and was 40% depreciated at time of
disposal was sold for $2,500
2. $10,000 of the long-term note payable was paid by issuing common stock.
3. Cash dividends paid were $5,000
"4. On January 1, 2010, the building was completely destroyed by a flood. Insurance proceeds on the
"
building were $30,000 (net of $2,000 taxes).
5. Investments (available-for-sale) were sold at $1,700 above their cost. The
company has made similar sales and investments in the past.
6. Cash of was paid for the acquisition of equipment.
7. A long-term note for $16,000 was issued for the acquisition of equipment.
8. Interest of $2,000 and income taxes of $6,500 were paid in cash.

Instructions:
Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country.


HINCKLEY CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2010
Cash flows from operating activities
Net income (a) Amount
Adjustments to reconcile net income to net cash provided by operating activities:

Loss on sale of equipment (b) Amount
Gain from flood damage Amount
Depreciation expense (c) Amount
Patent amortization Amount
Gain on sale of investments Amount
Increase in accounts receivable (net) Amount
Increase in inventory Amount
Increase in accounts payable Amount Formula
Net cash provided by operating activities Formula

Cash flows from investing activities
Sale of investments Amount
Sale of equipment Amount
Purchase of equipment (d) #VALUE!
Proceeds from flood damage to building Amount
Net cash provided by investing activities Formula

Cash flows from financing activities
Payment of dividends Amount
Payment of short-term note payable Amount
Net cash used by financing activities Formula

Increase in cash Amount
Cash, January 1, 2010 Amount
Cash, December 31, 2010 Formula

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest Amount
Income taxes: Amount

Noncash investing and financing activities
Retired note payable by issuing common stock Amount
Purchased equipment by issuing note payable Amount
Formula
Supporting Computations:

(a) Ending retained earnings Amount
Beginning retained earnings Amount
Net income Formula

(b) Cost Amount
Accumulated depreciation Amount
Book value Formula
Proceeds from sale Amount
Loss on sale Formula

(c) Accumulated depreciation on equipment sold Amount
Decrease in accumulated depreciation Amount
Depreciation expense Formula

(d) Beginning equipment balance Amount
Cost of equipment sold Amount
Remaining balance Formula
Purchase of equipment with note Amount
Adjusted balance Formula
Ending equipment balance Amount
Purchased with cash Formula

Expert:  Manal Elkhoshkhany replied 2 years ago.

Hi jenolson

 

Sure, please advise your deadline

 

Thank you

Customer: replied 2 years ago.
I will need this by 6 pm at the latest.
Expert:  Manal Elkhoshkhany replied 2 years ago.
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Manal Elkhoshkhany, Tutor
Category: Homework
Satisfied Customers: 9485
Experience: More than 5000 online tutoring sessions.
Manal Elkhoshkhany and 2 other Homework Specialists are ready to help you

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