ACC 206 Strayer Week 5 University Riverbed Company Accounting Assignment

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Question Description

Brief Exercise 10-02
Riverbed Company incurs the following expenditures in purchasing a truck: cash price $53,000, accident insurance $4,500, sales taxes $2,900, motor vehicle license $100, and painting and lettering $400. What is the cost of the truck?
Cost of the truck$
Brief Exercise 10-08

On January 1, 2020, the Whispering Winds Company ledger shows Equipment $68,000 and Accumulated Depreciation―Equipment $9,700. The depreciation resulted from using the straight-line method with a useful life of 12 years and salvage value of $2,100. On this date, the company concludes that the equipment has a remaining useful life of only 5 years with the same salvage value.

Compute the revised annual depreciation.

Revised annual depreciation$
Brief Exercise 10-11 a1-b (Part Level Submission)

Whispering Winds Mining Co. purchased for $9,140,000 a mine that is estimated to have 36,560,000 tons of ore and no salvage value. In the first year, 13,140,000 tons of ore are extracted.

(a1)

Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.)

Depletion cost per unit$ per ton
(a2)

Prepare the journal entry to record depletion for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(b)

Show how this mine is reported on the balance sheet at the end of the first year.

Whispering Winds Mining Co.
Balance Sheet (Partial)

$

:

$

Exercise 10-08 a-b (Part Level Submission) (Video)

Terry Wade, the new controller of Flint Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2020. His findings are as follows.

Date

Accumulated
Depreciation

Useful life
in Years

Salvage Value

Type of Asset

Acquired

Cost

1/1/20

Old

Proposed

Old

Proposed

Building1/1/14$821,000$116,7004050$43,000$57,500
Warehouse1/1/15115,00022,18025204,10020,820

All assets are depreciated by the straight-line method. Flint Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Terry’s proposed changes.
(a)

Compute the revised annual depreciation on each asset in 2020.

Building

Warehouse

Revised annual depreciation$

$

(b)

Prepare the entry to record depreciation on the building in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31

Exercise 10-09

Presented below are selected transactions at Pronghorn Company for 2020.

Jan. 1Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $60,700 on that date. It had a useful life of 10 years with no salvage value.
June 30Sold a computer that was purchased on January 1, 2017. The computer cost $41,600. It had a useful life of 5 years with no salvage value. The computer was sold for $13,600.
Dec. 31Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $42,660. 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. Pronghorn Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date

Account Titles and Explanation

Debit

Credit

(To record depreciation to date of disposal)

(To record sale of computer)

(To record depreciation to date of disposal)

Dec. 31

(To record retirement of truck)

Exercise 10-13 a1-a2 (Part Level Submission) (Video)

Pronghorn Company, organized in 2020, has the following transactions related to intangible assets.

1/2/20Purchased patent (8-year life)$592,000
4/1/20Goodwill purchased (indefinite life)360,000
7/1/2013-year franchise520,000
9/1/20Research and development costs178,000
(a1)

Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2020, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

(a2)

Calculate ending balances as at 12/31/20.

Ending balances
Patents$

Goodwill$

Franchises$

Research and Development Expense$

Problem 10-03A a-c (Part Level Submission)

On January 1, 2020, Riverbed Company purchased the following two machines for use in its production process.

Machine A:The cash price of this machine was $52,000. Related expenditures included: sales tax $1,900, shipping costs $200, insurance during shipping $60, installation and testing costs $90, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Riverbed estimates that the useful life of the machine is 5 years with a $5,200 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B:The recorded cost of this machine was $180,000. Riverbed estimates that the useful life of the machine is 4 years with a $9,900 salvage value remaining at the end of that time period.
(a)

Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1.The journal entry to record its purchase on January 1, 2020.

2.

The journal entry to record annual depreciation at December 31, 2020.

No.

Account Titles and Explanation

Debit

Credit

1.

2.

(b)

Calculate the amount of depreciation expense that Riverbed should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.)

(1)Riverbed uses the straight-line method of depreciation.
(2)Riverbed uses the declining-balance method. The rate used is twice the straight-line rate.
(3)Riverbed uses the units-of-activity method and estimates that the useful life of the machine is 113,400 units. Actual usage is as follows: 2020, 45,000 units; 2021, 33,000 units; 2022, 21,000 units; 2023, 14,400 units.
Depreciation Expense

2020

2021

2022

2023

Straight-line method

$

$

$

$

Declining-balance method

$

$

$

$

Units-of-activity method

$

$

$

$

(c)

Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2020)?



The highest amount in year 4 (2023)?



The highest total amount over the 4-year period?

Unformatted Attachment Preview

Question 1 For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: Annual Rate Number of Years Invested Compounded (a) Rate of Interest (b) Number of Periods a. 11% 11 Annually % b. 12% 7 Quarterly % c. 12% 19 Semiannually % 2. In a present value of an annuity of 1 table: Annual Rate Number of Years Invested Number of Rents Involved Frequency of Rents a. 10% 25 25 Annually % b. 12% 14 28 Semiannually % c. 12% 6 24 Quarterly % (a) Rate of Interest (b) Number of Periods Question 2 Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) (a) Click here to view factor tables What is the future value of $9,520 at the end of 5 periods at 8% compounded interest? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) $ The future value Question 3 Presented below are three unrelated situations. (a) Splish Company recently signed a lease for a new office building, for a lease period of 11 years. Under the lease agreement, a security deposit of $13,800 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year. Click here to view factor tables What amount will the company receive at the time the lease expires? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) $ The company will receive Question 4 Sheridan Excavating Inc. is purchasing a bulldozer. The equipment has a price of $95,700. The manufacturer has offered a payment plan that would allow Sheridan to make 11 equal annual payments of $18,285.31, with the first payment due one year after the purchase. (a) How much total interest will Sheridan pay on this payment plan? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) $ Total interest Question 5 Assume that Wal-Mart Stores, Inc. has decided to surface and maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following bids involving two different qualities of surfacing for a parking area of 12,000 square yards. Bid A: A surface that costs $5.75 per square yard to install. This surface will have to be replaced at the end of 5 years. The annual maintenance cost on this surface is estimated at 25 cents per square yard for each year except the last year of its service. The replacement surface will be similar to the initial surface. Bid B: A surface that costs $10.75 per square yard to install. This surface has a probable useful life of 10 years and will require annual maintenance in each year except the last year, at an estimated cost of 12 cents per square yard. Click here to view factor tables Compute present value of the bids. You may assume that the cost of capital is 12%, that the annual maintenance expenditures are incurred at the end of each year, and that prices are not expected to change during the next 10 years. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value of outflows for Bid A Present value of outflows for Bid B $ $ Which bid should be accepted by Wal-Mart. Wal-Mart should accept . Question 6 Pina Inc. owns and operates a number of hardware stores in the New England region. Recently, the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and related facilities. Purchase: The company can purchase the site, construct the building, and purchase all store fixtures. The cost would be $1,865,700. An immediate down payment of $415,500 is required, and the remaining $1,450,200 would be paid off over 5 years at $369,000 per year (including interest payments made at end of year). The property is expected to have a useful life of 12 years, and then it will be sold for $508,900. As the owner of the property, the company will have the following out-ofpocket expenses each period. Property taxes (to be paid at the end of each year) $41,500 Insurance (to be paid at the beginning of each year) 27,130 Other (primarily maintenance which occurs at the end of each year) 17,380 $86,010 Lease: First National Bank has agreed to purchase the site, construct the building, and install the appropriate fixtures for Pina Inc. if Pina will lease the completed facility for 12 years. The annual costs for the lease would be $292,200. Pina would have no responsibility related to the facility over the 12 years. The terms of the lease are that Pina would be required to make 12 annual payments (the first payment to be made at the time the store opens and then each following year). In addition, a deposit of $95,600 is required when the store is opened. This deposit will be returned at the end of the 12th year, assuming no unusual damage to the building structure or fixtures. Click here to view factor tables Compute the present value of lease vs purchase. (Currently, the cost of funds for Pina Inc. is 10%.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Lease Present value Purchase $ $ Which of the two approaches should Pina Inc. follow? Pina Inc. should the facilities ...
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Tutor Answer

AccountsChamp
School: UC Berkeley

Find the answer sheet attached herewith.Let me know, if you have any doubts.

Brief Exercise 10-02
Riverbed Company incurs the following expenditures in purchasing a truck: cash price $53,000,
accident insurance $4,500, sales taxes $2,900, motor vehicle license $100, and painting and
lettering $400. What is the cost of the truck?
Solution
53,000 +2,900 + 400 = 56,300

Brief Exercise 10-08
On January 1, 2020, the Whispering Winds Company ledger shows Equipment $68,000 and
Accumulated Depreciation―Equipment $9,700. The depreciation resulted from using the
straight-line method with a useful life of 12 years and salvage value of $2,100. On this date, the
company concludes that the equipment has a remaining useful life of only 5 years with the same
salvage value.
Solution
(68,000 -9,700 – 2,100) / 5 = 11,240

Brief Exercise 10-11 a1-b (Part Level Submission)
Whispering Winds Mining Co. purchased for $9,140,000 a mine that is estimated to have
36,560,000 tons of ore and no salvage value. In the first year, 13,140,000 tons of ore are
extracted
(a1)
Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.)
Total cost = 7,000,000 Estimated units = 35,000,000

Salvage value = 0

Solution = depletion cost per ton = Total cost - Salvage value/ total estimated units
=9,140,000 ÷ 36,560,000 = 0.25 per ton
Depletion cost per unit 0.25 per ton

(a2)
Prepare the journal entry to record depletion for the first year.
Account titles and explanation

Debt

Credit

Depletion expense

3,285,000

Accumulated Depletion

3,285,000

(b)
Show how this mine is reported on the balance sheet at the end of the first year.
Ore Mine

9,140,000

Less: Accumulated Depletion

3,285,000

5,855,000

Exercise 10-08 a-b (Part Level Submission) (Video)
Terry Wade, the new controller of Flint Company, has reviewed the exp...

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