Matlock Company uses a perpetual...
Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 66 units that cost $39 each. During June, the company purchased 197 units at $39 each, returned 8 units for credit, and sold 164 units at $66 each. Journalize the June transactions.
Description/Account
|
Debit
|
Credit
|
Accounts payable Cost of goods sold Accounts receivable Inventory Sales
|
|
|
Accounts payable Sales Inventory Accounts receivable Cost of goods sold
|
|
|
(To record inventory purchased.)
|
|
|
Accounts payable Inventory Accounts receivable Sales Cost of goods sold
|
|
|
Accounts payable Sales Cost of goods sold Inventory Accounts receivable
|
|
|
(To record inventory returned.)
|
|
|
Sales Inventory Cost of goods sold Accounts receivable Accounts payable
|
|
|
Sales Inventory Accounts payable Accounts receivable Cost of goods sold
|
|
|
(To record inventory sold.)
|
|
|
Inventory Accounts payable Accounts receivable Sales Cost of goods sold
|
|
|
Cost of goods sold Accounts payable Inventory Accounts receivable Sales
|
|
|
(To record cost of goods sold.)
|
|
|
Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available.
|
|
Units
|
Unit Cost
|
Total Cost
|
|
April 1 inventory
|
250
|
|
$16
|
|
$4,000
|
|
|
April 15 purchase
|
400
|
|
19
|
|
7,600
|
|
|
April 23 purchase
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Compute the April 30 inventory and the April cost of goods sold using the average cost method. (Round computations for cost per unit to 2 decimal places, e.g. 10.25 and answers to 0 decimal places, e.g. 2,250.)
Inventory
|
$
|
Cost of goods sold
|
$
|
Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.
|
|
Units
|
Unit Cost
|
Total Cost
|
|
April 1 inventory
|
250
|
|
$16
|
|
$4,000
|
|
|
April 15 purchase
|
400
|
|
19
|
|
7,600
|
|
|
April 23 purchase
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Compute the April 30 inventory and the April cost of goods sold using the FIFO method.
Inventory
|
$
|
Cost of goods sold
|
$
|
(FIFO, LIFO, Average Cost Inventory)
Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade's inventory records for Product BAP.
|
|
Units
|
Unit Cost
|
|
January 1, 2012 (beginning inventory)
|
774
|
|
$8.00
|
|
|
Purchases:
|
|
|
|
|
|
January 5, 2012
|
1,548
|
|
9.00
|
|
|
January 25, 2012
|
1,677
|
|
10.00
|
|
|
February 16, 2012
|
1,032
|
|
11.00
|
|
|
March 26, 2012
|
774
|
|
12.00
|
|
A physical inventory on March 31, 2012, shows 2,064 units on hand.
Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method.
|
ESPLANADE COMPANY
|
|
Computation of Inventory for Product BAP
|
|
BAP under FIFO Inventory Method
|
|
|
|
|
Units
|
Unit Cost
|
Total Cost
|
|
March 26, 2012
|
$
|
$
|
|
February 16, 2012
|
|
January 25, 2012
|
|
March 31, 2012, inventory
|
|
|
|
ESPLANADE COMPANY
|
|
Computation of Inventory for Product BAP
|
|
BAP under LIFO Inventory Method
|
|
|
|
|
Units
|
Unit Cost
|
Total Cost
|
|
Beginning inventory
|
$
|
$
|
|
January 5, 2012
|
|
March 31, 2012, inventory
|
|
|
(c)
|
Weighted average (Round weighted average cost to 2 decimal places, e.g. 2.25 and use this rounded amount for future calculations. Round the inventory on March to 0 decimal places, e.g. 1,250.)
|
|
ESPLANADE COMPANY
|
|
Computation of Inventory for Product BAP
|
|
BAP under Weighted Average Inventory Method
|
|
|
|
|
Units
|
Unit Cost
|
Total Cost
|
|
Beginning inventory
|
$
|
$
|
|
January 5, 2012
|
|
January 25, 2012
|
|
February 16, 2012
|
|
March 26, 2012
|
|
|
|
|
|
Weighted Average cost
|
$
|
|
|
|
|
March 31, 2012, inventory
|
$
|
Floyd Corporation has the following four items in its ending inventory.
|
|
|
Net Realizable Value (NRV)
|
NRV Less Normal Profit Margin
|
|
Jokers
|
$2,764
|
|
$2,833
|
|
$2,902
|
|
$2,211
|
|
|
Penguins
|
6,910
|
|
7,048
|
|
6,841
|
|
5,666
|
|
|
Riddlers
|
6,081
|
|
6,288
|
|
6,392
|
|
5,113
|
|
|
Scarecrows
|
4,422
|
|
4,132
|
|
5,293
|
|
4,243
|
|
Determine the final lower of cost or market inventory value for each item.
Jokers
|
$
|
Penguins
|
$
|
Riddlers
|
$
|
Scarecrows
|
$
|
Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $310,086 at both cost and market value. At December 31, 2013, the inventory was $414,414 at cost and $389,781 at market value. Prepare the necessary December 31 entry under:
(a)
|
the cost of goods sold method
|
Description/Account
|
Debit
|
Credit
|
Sales Cash Gain due to market increase of inventory Inventory Loss due to market decline of inventory Cost of goods sold Allowance to reduce inventory to market
|
|
Cash Cost of goods sold Gain due to market increase of inventory Loss due to market decline of inventory Inventory Sales Allowance to reduce inventory to market
|
|
Description/Account
|
Debit
|
Credit
|
Cash Sales Loss due to market decline of inventory Gain due to market increase of inventory Cost of goods sold Allowance to reduce inventory to market Inventory
|
|
Cost of goods sold Sales Inventory Gain due to market increase of inventory Cash Allowance to reduce inventory to market Loss due to market decline of inventory
|
|
Boyne Inc. had beginning inventory of $15,600 at cost and $26,000 at retail. Net purchases were $156,000 at cost and $221,000 at retail. Net markups were $13,000; net markdowns were $9,100; and sales were $204,100. 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.)
(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
|
$204,800
|
|
Purchases (gross)
|
819,200
|
|
Freight-in
|
38,400
|
|
Sales
|
1,280,000
|
|
Sales returns
|
89,600
|
|
Purchase discounts
|
15,360
|
(a)
|
Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
|
(b)
|
Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
|
Previn Brothers Inc. purchased land at a price of $28,950. Closing costs were $2,820. An old building was removed at a cost of $13,370. What amount should be recorded as the cost of the land?
$
Garcia Corporation purchased a truck by issuing an $96,000, 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
|
Discount on notes payable Depreciation expense Cash Notes payable Truck Notes receivable
|
|
|
Notes receivable Depreciation expense Cash Notes payable Truck Discount on notes payable
|
|
Depreciation expense Discount on notes payable Cash Notes payable Notes receivable Truck
|
|
|
Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $327,600. The estimated fair values of the assets are land $62,400, building $228,800, and equipment $83,200. 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
|
$
|
Fielder Company obtained land by issuing 2,000 shares of its $14 par value common stock. The land was recently appraised at $118,150. The common stock is actively traded at $57 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
|
Additional paid-in capital Land Cash Common stock Paid-in capital in excess of par
|
|
Paid-in capital in excess of par Land Common stock Additional paid-in capital Cash
|
|
Paid-in capital in excess of par Cash Additional paid-in capital Common stock Land
|
|
Navajo Corporation traded a used truck (cost $23,600, accumulated depreciation $21,240) for a small computer worth $4,366. Navajo also paid $1,180 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
|
Cash Computer Gain on disposal of truck Truck Accumulated depreciation
|
|
Gain on disposal of truck Accumulated depreciation Computer Cash Truck
|
|
Gain on disposal of truck Truck Accumulated depreciation Computer Cash
|
|
Computer Gain on disposal of truck Truck Cash Accumulated depreciation
|
|
Cash Accumulated depreciation Computer Truck Gain on disposal of truck
|
|
Mehta Company traded a used welding machine (cost $11,790, accumulated depreciation $3,930) for office equipment with an estimated fair value of $6,550. Mehta also paid $3,930 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
|
Machine Gain on disposal of machine Loss on disposal of machine Cash Accumulated depreciation Office equipment Depreciation expense
|
|
Loss on disposal of machine Office equipment Machine Cash Accumulated depreciation Depreciation expense Gain on disposal of machine
|
|
Loss on disposal of machine Accumulated depreciation Office equipment Machine Depreciation expense Cash Gain on disposal of machine
|
|
Accumulated depreciation Cash Depreciation expense Gain on disposal of machine Machine Office equipment Loss on disposal of machine
|
|
Loss on disposal of machine Office equipment Accumulated depreciation Depreciation expense Gain on disposal of machine Cash Machine
|
|
Depreciation is normally computed on the basis of the nearest
full month and to the nearest dollar.
|
day and to the nearest cent.
|
day and to the nearest dollar.
|
full month and to the nearest cent.
|
Fernandez Corporation purchased a truck at the beginning of 2012 for $57,540. The truck is estimated to have a salvage value of $2,740 and a useful life of 219,200 miles. It was driven 31,510 miles in 2012 and 42,470 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.)
Lockhard Company purchased machinery on January 1, 2012, for $70,800. The machinery is estimated to have a salvage value of $7,080 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.)
|
|
|
|
$
|
Jurassic Company owns machinery that cost $975,600 and has accumulated depreciation of $390,240. The expected future net cash flows from the use of the asset are expected to be $542,000. The fair value of the equipment is $433,600. Prepare the journal entry, if any, to record the impairment loss.
Description/Account
|
Debit
|
Credit
|
Depreciation expense Cash Loss on impairment Accumulated depreciation Machinery
|
|
Machinery Depreciation expense Cash Accumulated depreciation Loss on impairment
|
|
Question 21
Everly Corporation acquires a coal mine at a cost of $494,000. Intangible development costs total $123,500. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $98,800), after which it can be sold for $197,600. Everly estimates that 4,940 tons of coal can be extracted. If 865 tons are extracted the first year, prepare the journal entry to record depletion.
Description/Account
|
Debit
|
Credit
|
Accumulated depletion Development costs Restoration costs Inventory
|
|
Development costs Restoration costs Accumulated depletion Inventory
|
|
Question 22
Francis Corporation purchased an asset at a cost of $56,600 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,660. 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
|
$
|
Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $56,400. 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
|
Accounts payable Accumulated amortization Accounts receivable Cash Patents Patent amortization expense
|
|
Patents Cash Accumulated amortization Patent amortization expense Accounts receivable Accounts payable
|
|
(To record purchase of patent.)
|
|
|
Accounts payable Patent amortization expense Patents Cash Accumulated amortization Accounts receivable
|
|
Accumulated amortization Cash Patents Accounts receivable Patent amortization expense Accounts payable
|
|
(To record amortization.)
|
|
|
Karen Austin Corporation has capitalized software costs of $884,400, and sales of this product the first year totaled $400,470. Karen Austin anticipates earning $934,430 in additional future revenues from this product, which is estimated to have an economic life of 5 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.
|
|
|
|
$
|
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:
recognition of a loss and creation of a liability for the value of the land.
|
recognition of a loss only.
|
disclosure in note form only.
|
creation of a liability only.
|
Question 26
|
Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $69,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,230. On July 3, Roley returned damaged goods and received credit of $6,900. 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 discounts Accounts payable Cash Purchase returns and allowances Purchases
|
|
|
Cash Purchase returns and allowances Purchase discounts Accounts payable Purchases
|
|
|
Freight-in
|
|
|
Cash Accounts payable Purchases Purchase discounts Purchase returns and allowances
|
|
July 3
|
Purchase discounts Accounts payable Purchase returns and allowances Purchases Cash
|
|
|
Purchases Accounts payable Cash Purchase returns and allowances Purchase discounts
|
|
July 10
|
Purchases Accounts payable Cash Purchase returns and allowances Purchase discounts
|
|
|
Purchases Purchase returns and allowances Accounts payable Purchase discounts Cash
|
|
|
Purchases Purchase returns and allowances Purchase discounts Accounts payable Cash
|
|
Takemoto Corporation borrowed $100,800 on November 1, 2012, by signing a $103,068, 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 payable Cash Notes payable Discount on notes payable Interest expense Notes receivable
|
|
|
Interest expense Notes payable Notes receivable Discount on notes payable Interest payable Cash
|
|
|
Interest payable Notes payable Notes receivable Discount on notes payable Cash Interest expense
|
|
12/31/12
|
Notes receivable Notes payable Interest expense Interest payable Cash Discount on notes payable
|
|
|
Discount on notes payable Notes payable Interest payable Interest expense Cash Notes receivable
|
|
2/1/13
|
Interest payable Cash Discount on notes payable Interest expense Notes payable Notes receivable
|
|
|
Notes payable Cash Interest expense Notes receivable Interest payable Discount on notes payable
|
|
|
Interest expense Interest payable Notes payable Notes receivable Cash Discount on notes payable
|
|
|
Cash
|
|
Whiteside Corporation issues $549,000 of 9% bonds, due in 17 years, with interest payable semiannually. 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.)
$
Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $36,280 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $18,750 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 $184,394. Prepare Lost Ark's January 1, 2012, journal entries.
Description
|
Debit
|
Credit
|
Lease Liability Rent Expense Leased Machinery Under Capital Leases Interest Payable Cash Interest Expense Lease Receivable Machinery
|
$
|
|
Machinery Interest Expense Cash Lease Receivable Rent Expense Lease Liability Leased Machinery Under Capital Leases Interest Payable
|
|
$
|
(To record the lease)
|
|
|
Lease Receivable Cash Leased Machinery Under Capital Leases Interest Expense Machinery Interest Payable Rent Expense Lease Liability
|
$
|
|
Leased Machinery Under Capital Leases Machinery Rent Expense Cash Lease Receivable Lease Liability Interest Payable Interest Expense
|
|
$
|
(To record first lease payment)
|
|
|
On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $26,850 and immediately leased it back. The truck was carried on Irwin's books at $20,400. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $8,010 at the end of each year. The appropriate rate of interest is 15%, 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
|
Accumulated Depreciation Truck Lease Liability Interest Expense Cash Unearned Profit on Sale-Leaseback Leased Equipment Depreciation Expense
|
$
|
|
|
Truck Unearned Profit on Sale-Leaseback Cash Interest Expense Depreciation Expense Accumulated Depreciation Leased Equipment Lease Liability
|
|
$
|
|
Cash Truck Leased Equipment Interest Expense Unearned Profit on Sale-Leaseback Lease Liability Depreciation Expense Accumulated Depreciation
|
|
$
|
|
(To record the sale )
|
|
|
Jan. 1
|
Unearned Profit on Sale-Leaseback Cash Truck Lease Liability Depreciation Expense Accumulated Depreciation Interest Expense Leased Equipment
|
$
|
|
|
Unearned Profit on Sale-Leaseback Depreciation Expense Accumulated Depreciation Interest Expense Truck Leased Equipment Cash Lease Liability
|
|
$
|
|
(To record the leaseback)
|
|
|
Dec. 31
|
Depreciation Expense Unearned Profit on Sale-Leaseback Truck Leased Equipment Lease Liability Accumulated Depreciation Cash Interest Expense
|
$
|
|
|
Leased Equipment Accumulated Depreciation Interest Expense Unearned Profit on Sale-Leaseback Cash Truck Lease Liability Depreciation Expense
|
|
$
|
|
(To record depreciation)
|
|
|
Dec. 31
|
Cash Depreciation Expense Accumulated Depreciation Lease Liability Truck Interest Expense Unearned Profit on Sale-Leaseback Leased Equipment
|
$
|
|
|
Accumulated Depreciation Truck Unearned Profit on Sale-Leaseback Interest Expense Lease Liability Leased Equipment Depreciation Expense Cash
|
|
$
|
Dec. 31
|
Cash Interest Expense Truck Unearned Profit on Sale-Leaseback Lease Liability Leased Equipment Depreciation Expense Accumulated Depreciation
|
$
|
|
|
Interest Expense Unearned Profit on Sale-Leaseback Cash Leased Equipment Lease Liability Depreciation Expense Accumulated Depreciation Truck
|
$
|
|
|
Depreciation Expense Lease Liability Unearned Profit on Sale-Leaseback Leased Equipment Accumulated Depreciation Interest Expense Truck Cash
|
|
$
|
|
(To record first lease payment)
|
|
|