ACC 206 Strayer Week 5 University Riverbed Company Accounting Assignment

Acc 206

### 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 AccumulatedDepreciation Useful lifein Years Salvage Value Type of Asset Acquired Cost 1/1/20 Old Proposed Old Proposed Building 1/1/14 \$821,000 \$116,700 40 50 \$43,000 \$57,500 Warehouse 1/1/15 115,000 22,180 25 20 4,100 20,820

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. 1 Retired 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 30 Sold 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. 31 Discarded 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.

 1/2/20 Purchased patent (8-year life) \$592,000 4/1/20 Goodwill purchased (indefinite life) 360,000 7/1/20 13-year franchise 520,000 9/1/20 Research and development costs 178,000
 (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. 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 \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places \$enter a debit amount rounded to 0 decimal places
 (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?

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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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