ACC/291 - 39188946 / Week Two Assignment

Question 6

At December 31, 2011, Jimenez Company reported the following as plant assets.
Land $4,000,000
Buildings $28,500,000
Less: Accumulated depreciation-buildings 12,100,000 16,400,000
Equipment 48,000,000
Less: Accumulated depreciation-equipment 5,000,000 43,000,000
Total plant assets
$63,400,000
During 2012, the following selected cash transactions occurred.
April 1 Purchased land for $2,130,000.
May 1 Sold equipment that cost $780,000 when purchased on January 1, 2008. The equipment was sold for
$450,000.
June 1 Sold land purchased on June 1, 2002, for $1,500,000. The land cost $400,000.
July 1 Purchased equipment for $2,000,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2002. No salvage value was
received.





Correct.
Journalize the above transactions. The company uses straight-line depreciation for buildings and
equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is
estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of
at the time of sale or retirement. (For multiple debit/credit entries, list amounts from largest to
smallest eg 10, 5, 3, 2.)
Date Account/Description Debit Credit
Apr. 1 Land 2130000
Cash 2130000
May 1 Depreciation expense 26000
Acc. Depreciation-Equipment 26000
(To record depreciation.)
May 1 Cash 450000
Acc. Depreciation-Equipment 338000
Equipment 780000
Gain on disposal 8000
(To record sale of equipment.)
June 1 Cash 1500000
Gain on disposal 1100000
Land 400000
July 1 Equipment 2000000
Cash 2000000
Dec. 31 Depreciation expense 50000
Acc. Depreciation-Equipment 50000
(To record depreciation.)
Dec. 31 Acc. Depreciation-Equipment 500000
Equipment 500000
(To record retirement of equipment.)




Correct.

Record adjusting entries for depreciation for 2012.
Date Account/Description Debit Credit
Dec. 31 Depreciation expense 570000
Acc. Depreciation-Buildings 570000
(To record building depreciation.)
Dec. 31 Depreciation expense 4772000
Acc. Depreciation-Equipment 4772000
(To record equipment depreciation.)



Correct.
Complete the plant assets section of Jimenez's balance sheet at December 31, 2012. (List in the same
order as the partial balance sheet presented in the problem. Enter all amounts as positive
amounts and subtract where necessary.)
JIMENEZ COMPANY
Balance Sheet (Partial)
December 31, 2012
Plant Assets
Land $ 5730000
Buildings $ 28500000
Less: Acc. Depreciation-Buildings 12670000 15830000
Equipment 48720000
Less: Acc. Depreciation-Equipment 9010000 39710000
Total plant assets
$ 61270000





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Copyright 2000-2012 by John Wiley & Sons, Inc. or related companies. All rights reserved.
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ACC/291 - 39188946 / Week Two Assignment


Question 5

Beka Company owns equipment that cost $50,000 when purchased on January 1, 2008. It has been
depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated
useful life of 5 years.
Prepare Beka Company's journal entries to record the sale of the equipment in these four independent
situations.





Correct.
Sold for $28,000 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest
to smallest eg 10, 5, 3, 2.)
Account/Description Debit Credit
Cash 28000
Accum. deprec.-Equipment 27000
Equipment 50000
Gain on disposal 5000




Correct.

Sold for $28,000 on May 1, 2011. (For multiple debit/credit entries, list amounts from largest to
smallest eg 10, 5, 3, 2.)
Account/Description Debit Credit
Depreciation expense 3000
Accum. deprec.-Equipment 3000
(To update depreciation)
Accum. deprec.-Equipment 30000
Cash 28000
Equipment 50000
Gain on disposal 8000



Correct.
Sold for $11,000 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest
to smallest eg 10, 5, 3, 2.)
Account/Description Debit Credit
Accum. deprec.-Equipment 27000
Loss on disposal 12000
Cash 11000
Equipment 50000




Correct.
Sold for $11,000 on October 1, 2011. (For multiple debit/credit entries, list amounts from largest
to smallest eg 10, 5, 3, 2.)
Account/Description Debit Credit
Depreciation expense
6750
Accum. deprec.-Equipment 6750
(To update depreciation)
Accum. deprec.-Equipment 33750
Cash 11000
Loss on disposal 5250
Equipment 50000





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Copyright 2000-2012 by John Wiley & Sons, Inc. or related companies. All rights reserved.
Print by: FELIX DEL ROSARIO
ACC/291 - 39188946 / Week Two Assignment


Question 4


Your answer is correct.
Presented below are selected transactions at Ingles Company for 2011.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on that date. It
had a useful life of 10 years with no salvage value. (Assume depreciation is up to date as of December 31,
2010.)
June 30 Sold a computer that was purchased on January 1, 2008. The computer cost $40,000. It had a useful life of 5
years with no salvage value. The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $39,000. It was depreciated
based on a 6-year useful life with a $3,000 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Ingles Company uses straight-line depreciation.(For multiple
debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Date Account/Description Debit Credit
Jan. 1 Accumulated depreciation-Machinery 62000
Machinery 62000
June 30 Depreciation expense 4000
Accumulated depreciation-Computer 4000
(To update depreciation)
June 30 Accumulated depreciation-Computer 28000
Cash 14000
Computer 40000
Gain on disposal 2000
Dec. 31 Depreciation expense 6000
Accumulated depreciation-Truck 6000
(To update depreciation)
Dec.31 Accumulated depreciation-Truck 30000
Loss on disposal 9000
Delivery truck 39000

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Copyright 2000-2012 by John Wiley & Sons, Inc. or related companies. All rights reserved.
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ACC/291 - 39188946 / Week Two Assignment


Question 3


Correct.
Match the statement with the term most directly associated with it.
Goodwill Amortization

Intangible assets Franchise

Research and development costs

1. Rights, privileges, and competitive advantages that result from the ownership of long-lived
assets that do not possess physical substance.
Intangible assets
2. The allocation of the cost of an intangible asset to expense in a rational and systematic
manner.
Amortization
3. A right to sell certain products or services, or use certain trademarks or trade names
within a designated geographic area.
Franchise
4. Costs incurred by a company that often lead to patents or new products. These costs must
be expensed as incurred.
Research and development
costs
5. The excess of the cost of a company over the fair market value of the net assets acquired. Goodwill


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ACC/291 - 39188946 / Week Two Assignment


Question 2


Correct.
Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain
Company is as follows: buildings $1,100,000; accumulated depreciation-buildings $650,000; goodwill
$410,000; coal mine $500,000; accumulated depletion-coal mine $108,000. Complete the partial balance
sheet of Spain Company for these items. (List assets with smallest net book value first. Enter all
amounts as positive amounts and subtract where necessary.)
SPAIN COMPANY
Balance Sheet (Partial)
December 31, 2011
Property, plant, and equipment
Coal mine $ 500000
Less: Accumulated depletion 108000 $ 392000
Buildings 1100000
Less: Accumulated depreciation 650000 450000
Total property, plant, and equipment $ 842000
Intangible assets
Goodwill 410000


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Copyright 2000-2012 by John Wiley & Sons, Inc. or related companies. All rights reserved.
Print by: FELIX DEL ROSARIO
ACC/291 - 39188946 / Week Two Assignment


Question 1

The ledger of Hixson Company at the end of the current year shows Accounts Receivable $120,000, Sales
$840,000, and Sales Returns and Allowances $30,000.





Correct.
If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting
entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible.
Date Account/Description Debit Credit
Dec. 31 Bad debts expense 1400
Accounts receivable-Fell 1400





Correct.
If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the
adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2)
10% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31 Bad debts expense 8100
Allowance for doubtful accounts 8100
(2) Dec. 31 Bad debts expense 9900
Allowance for doubtful accounts 9900



Correct.
If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the
adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2)
6% of accounts receivable.
Date Account/Description Debit Credit
(1) Dec. 31 Bad debts expense 6075
Allowance for doubtful accounts 6075
(2) Dec. 31 Bad debts expense 7400
Allowance for doubtful accounts 7400





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Copyright 2000-2012 by John Wiley & Sons, Inc. or related companies. All rights reserved.