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ACCT 203 Lecture Notes - Lecture 6: Historical Cost

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18 Jul 2016
School
George Mason University
Department
Accounting
Course
ACCT 203
Professor
Harley

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Document Summary

To record purchase of a car for cash. To record purchase of a car by entering into a car loan. To record the purchase of a car with ,000 cash down payment and the remainder on a loan . If the car has no salvage (residual) value and a life of 5 years then we know the depn expense is (20,000/5 or ,000 per year): To record depn expense on a car for one year assuming no salvage value and 5 year estimated useful life. (20,000 zero salvage)/ 5 years = ,000 per year. To record sale of equipment with historical cost of , accumulated depn to date of 250 on the date of sale, and cash received on sale of 500. If of cash was received you would have a gain on sale of . To record sale of equipment with historical cost of , accumulated depn to date of 250 on the date of sale.

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Related Questions

The worksheet of Bridget's Office Supplies contains thefollowing revenue, cost, and expense accounts. The merchandiseinventory amounted to $58,675 on January 1, 2016, and $51,625 onDecember 31, 2016. The expense accounts numbered 611 through 617represent selling expenses, and those numbered 631 through 646represent general and administrative expenses.

Accounts
401 Sales $ 245,400 Cr.
451 Sales Returnsand Allowances 4,240 Dr.
491 MiscellaneousIncome 290 Cr.
501 Purchases 102,500 Dr.
502 Freight In 1,865 Dr.
503 PurchasesReturns and Allowances 3,490 Cr.
504 PurchasesDiscounts 1,690 Cr.
611 SalariesExpense—Sales 44,200 Dr.
614 Store SuppliesExpense 2,200 Dr.
617 DepreciationExpense—Store Equipment 1,400 Dr.
631 RentExpense 12,400 Dr.
634 UtilitiesExpense 2,890 Dr.
637 SalariesExpense—Office 20,000 Dr.
640 Payroll TaxesExpense 4,900 Dr.
643 DepreciationExpense—Office Equipment 460 Dr.
646 UncollectibleAccounts Expense 610 Dr.
691 InterestExpense 520 Dr.

The worksheet of Bridget's Office Supplies contains thefollowing owner’s equity accounts.

Accounts
301 Bridget Swanson, Capital $ 62,660 Cr.
302 Bridget Swanson, Drawing 40,750 Dr.

Net income for the year $45,635.

The worksheet of Bridget's Office Supplies contains thefollowing asset and liability accounts. The balance of theNotes Payable account consists of notesthat are due within a year.

Accounts
101 Cash $ 9,205 Dr.
107 Change Fund 390 Dr.
111 AccountsReceivable 5,030 Dr.
112 Allowance forDoubtful Accounts 750 Cr.
121 MerchandiseInventory 51,625 Dr.
131 StoreSupplies 990 Dr.
133 PrepaidInterest 75 Dr.
141 StoreEquipment 10,100 Dr.
142 Accum.Depreciation—Store Equipment 1,070 Cr.
151 OfficeEquipment 3,180 Dr.
152 Accum.Depreciation—Office Equipment 390 Cr.
201 NotesPayable 5,390 Cr.
203 AccountsPayable 3,615 Cr.
216 InterestPayable 55 Cr.
231 Sales TaxPayable 1,780 Cr.

Prepare a balance sheet dated December 31, 2016.

The net changes in the balance sheet accounts of Eusey, Inc. forthe year 2011 are shown below:
Account Debit Credit
Cash dr $ 265,600
Accounts receivable cr $ 64,000
Allowance for doubtful accounts cr 14,000
Inventory dr 287,200
Prepaid expenses dr 40,000
Long-term investments cr 144,000
Land dr 300,000
Buildings dr 600,000
Machinery dr 100,000
Office equipment cr 28,000
Accumulated depreciation:
Buildings cr 24,000
Machinery dr 20,000
Office equipment dr 12,000
Accounts payable dr 233,200
Accrued liabilities cr72,000
Dividends payable cr 128,000
Bonds payable cr 940,000
Preferred stock ($50 par) dr 60,000
Common stock ($10 par) cr 156,000
Additional paid-in capital—common cr 247,200
Retained earnings cr 60,800
Totals $1,898,000 $1,898,000

Additional information:
1.Unaudited Income Statement Data for Year Ended December 31,2011
Income before extraordinary items $420,000
Extraordinary losses: Condemnation of land $132,000
Loss from redemption of preferred stock 20,000 (152,000)
Net income $268,000
2. Cash dividends of $128,000 were declared December 15, 2011,payable January 15, 2012. A 5% stock dividend was issued March 31,2011, when the market value was $22.00 per share.
3. The long-term investments were sold at a $4,000 loss.
4. A building and land which cost $480,000 and had a book value of$300,000 were sold for $400,000. The cost of the land, included inthe cost and book value above, was $20,000.
5. The following entry was made to record an exchange of an oldmachine for a new one:
Machinery dr 160,000
Accumulated Depreciation—Machinery dr 40,000
Machinery cr 60,000
Bonds Payable cr 140,000
6. A fully depreciated copier machine which cost $28,000 waswritten off.
7. Preferred stock of $60,000 par value was redeemed for $80,000;the loss was charged against earnings.
8. The company issued 12,000 shares of its common stock on June 15,2011 for $27 a share. A $2 per share broker underwriting fee wasrecognized as part of Professional Fees Expense in the operatingsection of the income statement. There were 87,600 sharesoutstanding on December 31, 2011.
9. Bonds were issued at 104 on December 31, 2011. The premium wascredited to Interest Revenue.
10. Land that was condemned had a book value of $240,000.

Requirements:
1. Prepare a properly formatted and complete statement of cashflows using the indirect method. Ignore tax effects.

Tierney County

Total Governmental Funds

Preclosing Trial Balance

December 31,2005

Cash 1,348,200 (dr)

Investments 7,355,600 (dr)

Due from general fund 3,500 (dr)

Taxes Receivable 189,000 (dr)

Allowance for uncollectable taxes 38,500 (cr)

Interest and penalities receivable 5.250 (dr)

Allowance for uncollectable interest and penalities 476 (cr)

accounts receivable 45,500 (dr)

Allowance for uncollectable accounts 1,750 (cr)

Accrued interest receivable 191,800 (dr)

Inventory of materials and supplies 16,450 (dr)

vouchers payable 1,016,400 (cr)

accrued salaries and wages payable 17,500 (cr)

contracts payable retained percentage 350,000 (cr)

interest payable (on current debt) 1,050 (cr)

unearned operating grant revenues 360,500 (cr)

unearned capital grant revenues 525,000 (cr)

Due to enterprise fund 11,550 (cr)

due to special revenue funds 3,500 (cr)

deferred tax revenues 107,800 (cr)

fund balance (preclosing) 695,049 (cr)

Revenues:

Taxes 3,395,000 (cr)

licenses and permits 311,500 (cr)

Fines and Forfeitures 133,000 (cr)

Unrestricrted grants 367,500 (cr)

Operating Grants 420,000 (cr)

Capital Grants 7,231,000 (cr)

Investment Income 600,000 (cr)

Other Revenues 7,000 (cr)

Current operation expenditures / expenses

General government 274,400 (dr)

public safety 1,417,500 (dr)

streets and roads 861,700 (dr)

health and sanitation 162,400 (dr)

Parks and recreation 65,100 (dr)

Captial outlay expenditures:

for construction 8,890,000 (dr)

for equipment 203,700 (dr)

Debt Service Expenditures:

bond principal retirement 700,000 (dr)

interest and bonds 356,745 (dr)

fiscal agent fees 52,500 (dr)

bond issue costs 35,000 (dr)

Other Financing Sources:

bonds 6,300,000 (cr)

bond premium 42,000 (cr)

Proceeds from sale fo general capital assets 175,000 (cr)

Transfers form general fund 616,000 (cr)

Transfers from Special revenue funds 70,000 (cr)

Transfers from enterprise funds 63,000 (cr)

Other Financing uses:

Transfers to capital projects funds 56,000 (dr)

trasfers to debt service funds 560,000 (dr)

transfers to general fund 70,000 (dr)

Totals 22,860,075 both

1. the beginning trial balance of the general capital assets andgeneral long term liabilities accounts at January 1, 2015 was

land 465,500 (dr)

buildings 4,375,000 (dr)

accumulated depreciation _ buildings 2,730,000 (cr)

machinery and equipment 1,400,000 (dr)

accumulated depreciation machinery and equipment 525,000(cr)

streets and roads 7,000,000 (dr)

accumulated depreciation streets and roads 4,200,000 (dcr

bonds payable 2,800,000(cr)

premium on bonds payable 70,000(cr)

liability for claims andjudgements - long term 490,000 (cr)

compensated absences liability -long term 350,000 (cr)

net position 2,075,500(cr)

totals 13,240,500

2. the balance of the long-termclaims and judgments obligation at december 31, 2015 was 450,000.all claims and judgements of the county are related to health andsanitation.

3. the balance fo the long-termliability for compensated absences at december 31, 2015 was425,000, compensated absence liabilities are generated equally bythe general government, public safety, streets and roads, andhealth and sanitation.

4. the bons issuance occurred atyear end. the equipment purchases occurred at the beginning of theyear.

5. the january 1, 2015 balance ofaccrued salaries and wages payable was 25,000

6. the january 1, 2015 balance ofdeferred tax revenue was 84,000

7. the operating grants revenueswere associated with public safety (100,000) and health andsanitaiton. the capital grants were associated with streets androads.

8. the accrued interst associatedwith bonds at december 31,2015 was 99,000 the january 1 2015balance was 87,500

9. the remaining term of thebonds payable with the premium (70,000) is 10 years. use straightline amortization.

10. the county depereciatesmachinery and equipment over 5 years, building over 20 years, andstreets and roads over 30 years. assume zero salvagevaleus.

11. depreciation expense on thebuildings and on the machinery and equipment is associated withfunctions as follows: general government 10 %, pulbic safety 50%,streets and roads 25%, health and sanitaiton 10%, and parks andrecreation 5%.

12. the cpaital asset sold wasequipment, which cost 500,000 and had accumulated depreciation atthe january 1 sale date of 400,000

13. the county's only internalservice fund provides 75% of its services to enterprise funds andsets its billings equal to its costs of providing services. Theinternal service fund billings to general governmental departmentsduring the year totaled 100,000. billings of 25,000 were associatedwith each functional category of expenditures except parks andrecreation.

Reguired: the december 31, 2015total fund balance (postclosing) was 6,721,274. Prepare a balancesheet conversion worksheet to derive government-wide, governmentalactivities data for Tierney County.