Public Administration - Municipal ACC106 Lecture Notes - Lecture 5: Accounting Equation, Income Statement
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1
A machine originally had an estimated useful life of 6 years,but after 2 complete years, it was decided that the originalestimate of useful life should have been 11 years. At that pointthe remaining cost to be depreciated should be allocated over theremaining: 2.
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3.
Wickland Company installs a manufacturing machine in itsproduction facility at the beginning of the year at a cost of$108,000. The machine's useful life is estimated to be 4 years, or140,000 units of product, with a $2,000 salvage value. During itssecond year, the machine produces 28,000 units of product.Determine the machines' second year depreciation under theunits-of-production method. (Do not round intermediatecalculations.) |
$21,200.
$26,500.
$27,000.
$21,600.
$27,500.
4.
Gaston owns equipment that cost $13,500 with accumulateddepreciation of $2,700. Gaston asks $12,700 for the equipment butsells the equipment for $9,700. Which of the following would not bepart of the journal entry to record the disposal of theequipment? |
Debit Accumulated Depreciation $2,700.
Credit Equipment $13,500.
Debit Loss on Disposal of Equipment $1,100.
Credit Gain on Disposal of Equipment $1,100.
Debit Cash $9,700.
PA9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets [LO 9-1, LO 9-2, LO 9-3, LO 9-4, LO 9-5, LO 9-6]
The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. |
January | 2 | , 2015 | Paid $88,000 cash to purchase storage shed components. |
January | 3 | , 2015 | Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000. |
April | 1 | , 2015 | Paid $31,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $5,000. |
May | 13 | , 2015 | Paid $300 cash for repairs to the pickup truck. |
July | 1 | , 2015 | Paid $27,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years. |
December | 31 | , 2015 | Recorded depreciation and amortization on the pickup truck, storage shed, and patent. |
June | 30 | , 2016 | Sold the pickup truck for $26,000 cash. (Record the depreciation on the truck prior to recording its disposal.) |
December | 31 | , 2016 | Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). |
Required: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepare the journal entries required on each of the above dates.
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In January 2013, Mitzu Co. pays $2,700,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $579,500, with a useful life of 20 years and an $90,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $549,000 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs: |
Cost to demolish Building 1 | $ | 338,400 |
Cost of additional land grading | 187,400 | |
Cost to construct new building (Building 3), having a useful life | 2,282,000 | |
Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value | 173,000 | |
1.
value:
10.00 points
Required information
Required: |
1. | Allocate the costs incurred by Mitzu to the appropriate columns and total each column. |
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2. | Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2.Journal entry worksheet
Record the costs of the plant assets.
Note: Enter debits before credits.
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