ACC 291 Business Accounting Trudy Company Question and Answer

ACC 291 Business Accounting Trudy Company Question and Answer_A+ Answer

ACC 291 Business Accounting Trudy Company Question and Answer

Q: Trudy Company incurred the following costs.

1 Sales tax on factory machinery purchased $ 5,000

2.Painting of and lettering on truck immediately upon purchase 700

3.Installation and testing of factory machinery 2,000

4.Real estate broker?s commission on land purchased 3,500

5.Insurance premium paid for first year?s insurance on new truck 880

6.Cost of landscaping on property purchased 7,200

7.Cost of paving parking lot for new building constructed 17,900

8.Cost of clearing, draining, and filling land 13,300

9.Architect?s fees on self-constructed building 10,000

Instructions

Indicate to which account Trudy would debit each of the costs.

E10-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2008.The truck
has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated
useful life of 8 years.Actual miles driven were 15,000 in 2008 and 12,000 in 2009.
Instructions Compute depreciation using different methods
(a) Compute depreciation expense for 2008 and 2009 using (1) the straight-line method, (2) the
units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2008 depreciation.
(2) Show how the truck would be reported in the December 31, 2008, balance sheet.

E10-9 Presented below are selected transactions at Ingles Company for 2008.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 1998.The machine cost
$62,000 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, 2005.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, 2004. The truck cost
$39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions Journalize entries for disposalof plant assets
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. (Assume depreciation is up to date as of December 31, 2007.)

E10-13 Herzogg Company, organized in 2008, has the following transactions related to intangible
assets.
1/2/08 Purchased patent (7-year life) $560,000
4/1/08 Goodwill purchased (indefinite life) 360,000
7/1/08 10-year franchise; expiration date 7/1/2018 440,000
9/1/08 Research and development costs 185,000
Instructions
Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Makethe adjusting entries as of December 31, 2008, recording any necessary amortization and reportingall intangible asset balances accurately as of that date.

P10-5A At December 31, 2008, 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 2009, 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, 2005.The
equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 1999, 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, 1999. No salvage
value was received.
Instructions
(a) 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.
(b) Record adjusting entries for depreciation for 2009.
(c) Prepare the plant assets section of Jimenez?s balance sheet at December 31, 2009.

E9-3 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.
Instructions
(a) 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.
(b) 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.
(c) 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.

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