Question Description
BE10-1. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Determine the cost of land. (LO 1) |
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The following expenditures were incurred by McCoy Company in purchasing land: cash price $50,000, accrued taxes $3,000, attorneys' fees $2,500, real estate broker's commission $2,000, and clearing and grading $3,500. What is the cost of the land?
BE10-2. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Determine the cost of a truck. (LO 1) |
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Rich Castillo Company incurs the following expenditures in purchasing a truck: cash price $30,000, accident insurance $2,000, sales taxes $2,100, motor vehicle license $100, and painting and lettering $400. What is the cost of the truck?
BE10-3. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Compute straight-line depreciation. (LO 2) |
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Corales Company acquires a delivery truck at a cost of $38,000. The truck is expected to have a salvage value of $6,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line method.
BE10-4. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Compute depreciation and evaluate treatment. (LO 2), |
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Chisenhall Company purchased land and a building on January 1, 2014. Management's best estimate of the value of the land was $100,000 and of the building $200,000. However, management told the accounting department to record the land at $220,000 and the building at $80,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value. Why do you suppose management requested this accounting treatment? Is it ethical?
BE10-5. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Compute declining-balance depreciation. (LO 2) |
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Depreciation information for Corales Company is given in
BE10-3. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method.
BE10-6. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Compute depreciation using the units-of-activity method. (LO 2) |
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Rosco Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 150,000 miles. Taxi no. 10 cost $39,500 and is expected to have a salvage value of $500. Taxi no. 10 is driven 30,000 miles in year 1 and 20,000 miles in year 2. Compute the depreciation for each year.
BE10-7. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Compute revised depreciation. (LO 2) |
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On January 1, 2014, the Morgantown Company ledger shows Equipment $32,000 and Accumulated Depreciation—Equipment $9,000. The depreciation resulted from using the straight-line method with a useful life of 10 years and salvage value of $2,000. On this date, the company concludes that the equipment has a remaining useful life of only 4 years with the same salvage value. Compute the revised annual depreciation.
BE10-8. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare entries for delivery truck costs. (LO 3) |
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Flaherty Company had the following two transactions related to its delivery truck.
[img alt="" border="0" height="1" width="20" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | |
| Paid $45 for an oil change. |
[img alt="" border="0" height="5" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> |
2. | Paid $400 to install special gear unit, which increases the operating efficiency of the truck. |
Prepare Flaherty's journal entries to record these two transactions.
BE10-9. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare entries for disposal by retirement. (LO 4) |
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Prepare journal entries to record the following.
(a) | Sound Tracker Company retires its delivery equipment, which cost $41,000. Accumulated depreciation is also $41,000 on this delivery equipment. No salvage value is received. |
(b) | Assume the same information as (a), except that accumulated depreciation is $37,000, instead of $41,000, on the delivery equipment. |
BE10-10. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare entries for disposal by sale. (LO 4) |
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Gunkelson Company sells equipment on September 30, 2014, for $18,000 cash. The equipment originally cost $72,000 and as of January 1, 2014, had accumulated depreciation of $42,000. Depreciation for the first 9 months of 2014 is $5,250. Prepare the journal entries to (a) update depreciation to September 30, 2014, and (b) record the sale of the equipment.
BE10-11. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare depletion expense entry and balance sheet presentation for natural resources. (LO 5) |
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Franceour Mining Co. purchased for $7 million a mine that is estimated to have 35 million tons of ore and no salvage value. In the first year, 5 million tons of ore are extracted and sold.
(a) | Prepare the journal entry to record depletion expense for the first year. |
(b) | Show how this mine is reported on the balance sheet at the end of the first year. |
BE10-12. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare amortization expense entry and balance sheet presentation for intangibles. (LO 6) |
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Campanez Company purchases a patent for $140,000 on January 2, 2014. Its estimated useful life is 10 years.
(a) | Prepare the journal entry to record amortization expense for the first year. |
(b) | Show how this patent is reported on the balance sheet at the end of the first year. |
BE10-13. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Classify long-lived assets on balance sheet. (LO 7) |
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Information related to plant assets, natural resources, and intangibles at the end of 2014 for Dent Company is as follows: buildings $1,100,000; accumulated depreciation—buildings $600,000; goodwill $410,000; coal mine $500,000; accumulated depletion—coal mine $108,000. Prepare a partial balance sheet of Dent Company for these items.
BE10-14. | [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Analyze long-lived assets. (LO 7) |
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In a recent annual report, Target reported beginning total assets of $44.1 billion; ending total assets of $44.5 billion; and net sales of $63.4 billion. Compute Target's asset turnover.
BE10-15. | [img align="absmiddle" alt="" border="0" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/CMS/image_n/asterisk_i.png"> [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare entry for disposal by exchange. (LO 8) |
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Olathe Company exchanges old delivery equipment for new delivery equipment. The book value of the old delivery equipment is $31,000 (cost $61,000 less accumulated depreciation $30,000). Its fair value is $24,000, and cash of $5,000 is paid. Prepare the entry to record the exchange, assuming the transaction has commercial substance.
BE10-16. | [img align="absmiddle" alt="" border="0" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/CMS/image_n/asterisk_i.png"> [img alt="" border="0" height="1" width="50" src="http://edugen.wiley.com/edugen/courses/crs7040/common/art/pixel.gif"> | | Prepare entry for disposal by exchange. (LO 8) |
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Assume the same information as
BE10-15, except that the fair value of the old delivery equipment is $33,000. Prepare the entry to record the exchange.