Financial Accounting solved Assignment and Homework Solution Sample

QUESTION

1.Journalize the following transactions using the allowance method of accounting for uncollectible receivables.

Apr. 1  Sold merchandise on account to Jim Dobbs, \$7,200. The cost of the merchandise is \$5,400.

June 10  Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.

Oct. 11  Reinstated the account of Jim Dobbs and received cash in full payment.

 Date Debit Credit

2  (10 points) At the end of the current year, Accounts Receivable has a balance of \$700,000; Allowance for Doubtful Accounts has a credit balance of \$5,500; and sales for the year total \$3,500,000.  Bad debt expense is estimated at ½ of 1% of net sales.

(a) Journalize the adjusting entry for bad debt expense;

 Date Debit Credit

(b) Determine the adjusted balances of:

Accounts Receivable

Allowance for Doubtful Accounts

Bad Debt Expenses

Net Realizable value of accounts receivable.

1. (5 points) Eagle Country Club has acquired a lot to construct a clubhouse.  Eagle had the following costs related to the construction:
 Architects’ fees \$  45,000 Construction labor 80,000 Engineers’ fees 15,000 Fences around building 9,000 Grading and leveling 10,000 Insurance costs incurred during construction 7,000 Interest on money borrowed for construction 5,000 Land 73,000 Building materials 237,000 Sales taxes 6,000 Trees and shrubs 6,000

Determine the cost of the club house to be reported on the balance sheet.

4 For each of the following fixed assets, determine the depreciation expense for 2013:
Disposal date is N/A if asset is still in use.
Method:  SL = straight-line; DDB = double-declining-balance
Assume the estimated life is five years for each asset.

 ​ Item ​ Cost Residual Value ​ Purchase Date ​ Disposal Date ​ Depr. Method Depr. Expense 2013 A \$40,000 \$ 4,000 July 1, 2013 N/A SL B 50,000 5,000 Jan. 1, 2010 Aug. 31,2013 SL C 60,000 2,000 Oct. 1, 2013 N/A DDB D 80,000 10,000 Jan. 1, 2012 Apr. 1, 2013 DDB

1. Computer equipment (office equipment) purchased 6½ years ago for \$170,000, with an estimated life of eight years and a residual value of \$10,000, is now sold for \$60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.)  Journalize the following entries:
 (a) Record the depreciation for the one-half year prior to the sale, using the straight-line method. (b) Record the sale of the equipment. (c) Assuming that the equipment had been sold for \$25,000 cash, prepare the entry to record the sale.
 Date Debit Credit

6 Solare Company acquired mineral rights for \$60,000,000.  The diamond deposit is estimated at 6,000,000 tons.  During the current year, 2,300,000 tons were mined and sold.

 (a) Determine the depletion rate. (b) Determine the amount of depletion expense for the current year. (c) Journalize the adjusting entry to recognize the depletion expense.
 Date Debit Credit

1.  On July 1, Sterns Co. acquired patent rights for \$36,000.  The patent has a useful life of six years and a legal life of 15 years.  Journalize the adjusting entry on December 31 to recognize the amortization.
 Date Debit Credit

1. On May 15, a business issued a 120-day, 6% note for \$10,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity (be sure to indicate the due date), including interest.
 Date Debit Credit

1. An employee receives an hourly rate of \$45, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, \$950; social security tax rate, 6.2%; Medicare tax rate, 1.45%; state unemployment compensation tax, 3.4% on the first \$7,000; federal unemployment compensation tax, 0.6% on the first \$7,000.
Journalize the necessary entries related to payroll:

(a) This is the first payroll of the year and the employee has no cumulative earnings for the year to date.

 Date Debit Credit

1. Nelson Industries warrants its products for one year. The estimated product warranty is 4.3% of sales. Sales were \$475,000 for September. In October, a customer received warranty repairs requiring \$215 of parts and \$65 of labor.

 (a) Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense. (b) Journalize the entry to record the warranty work provided in October.
 Date Debit Credit

1.  Jesse and Tim form a partnership by combining the assets of their separate businesses.  Jesse contributes accounts receivable with a face amount of \$50,000 and equipment with a cost of \$180,000 and accumulated depreciation of \$100,000.  The partners agree that the equipment is to be valued at \$58,000, that \$3,500 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that \$2,000 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of \$21,000 and merchandise inventory of \$44,500.  The partners agree that the merchandise inventory is to be valued at \$48,000.  Journalize the entries to record in the partnership accounts (a) Jesse’s investment and (b) Tim’s investment.
 Date Debit Credit

1.  Emmett and Sierra formed a partnership dividing income as follows:
2. Annual salary allowance to Emmett of \$48,000
3. Interest of 8% on each partner’s capital balance on January 1
4. Any remaining net income divided equally

Emmett and Sierra had \$25,000 and \$140,000, respectively, in their January 1 capital balances.  Net income for the year was \$200,000.

How much net income should be distributed to Emmett?

1.  S. Stephens and J. Perez are partners in Space Designs. Stephens and Perez share income equally.  D. Fredericks will be admitted to the partnership.  Prior to the admission, equipment was revalued downward by \$8,000.  The capital balances of each partner are \$100,000 and \$139,000, respectively, prior to the revaluation.Required
 (1) Provide the journal entry for the asset revaluation. (2) Provide the journal entry for Fredericks’ admission under the following independent situations: (a) Fredericks purchased a 20% interest for \$50,000. (b) Fredericks purchased a 30% interest for \$125,000.
 Date Debit Credit

1.  Immediately prior to the process of liquidation, partners Micco, Niccum, and Orwell have capital balances of \$70,000, \$20,000, and \$30,000, respectively.  There is a cash balance of \$10,000, noncash assets total \$160,000, and liabilities total \$50,000.  The partners share net income and losses in the ratio of 2:2:1.Journalize the entries to record the liquidation outlined below, using Assets as the account title for the noncash assets and Liabilities as the account title for all creditors’ claims.
 (a) Sold the noncash assets for \$80,000 in cash. (b) Divided the loss on realization. (c) Paid the liabilities. (d) Received cash from the partner with the deficiency. (e) Distributed the cash to the partners.
 Date Debit Credit

ANSWER

1.

 Date Debit Credit Apr-01 Accounts Recievable-Jim Dobbs 7200 Revenue 7200 Cost of Goods sold 5400 Inventory 5400 Jun-10 Cash 2400 Bad Debts 4800 Accounts Recievable-Jim Dobbs 7200 Oct-11 Accounts Recievable-Jim Dobbs 4800 Bad Debts 4800 Cash 4800 Accounts Recievable-Jim Dobbs 4800

​2.

(a) Journalize the adjusting entry for bad debt expense;

 Date Debit Credit 31 dec Bad debt Expense 17500 Allowance for doubtful debts 17500

(b) Determine the adjusted balances of:

Accounts Receivable 700000

Allowance for Doubtful Accounts 23000

Bad Debt Expense 17500

Net Realizable value of accounts receivable. 677000

 Architects’ fees \$  45,000 Construction labor 80,000 Engineers’ fees 15,000 Fences around building 9,000 Grading and leveling 10,000 Insurance costs incurred during construction 7,000 Interest on money borrowed for construction 5,000 Land 73,000 Building materials 237,000 Sales taxes 6,000 Trees and shrubs 6,000

Determine the cost of the club house to be reported on the balance sheet.

 Architects’ fees 45,000 Construction labor 80,000 Engineers’ fees 15,000 Fences around building 9,000 Grading and leveling 10,000 Insurance costs incurred during construction 7,000 Interest on money borrowed for construction 5,000 Land 73,000 Building materials 237,000 Trees and shrubs 6,000 Cost of Club House 2,50,000

4

 ​ ​ Residual Value ​ ​ ​ Depr. Item Cost Purchase Date Disposal Date Depr. Method Expense 2013 A 40,000 4,000 July 1, 2013 N/A SL 3600 B 50,000 5,000 Jan. 1, 2010 Aug. 31,2013 SL 6000 C 60,000 2,000 Oct. 1, 2013 N/A DDB 6000 D 80,000 10,000 Jan. 1, 2012 Apr. 1, 2013 DDB 4800

 (a) Record the depreciation for the one-half year prior to the sale, using the straight-line method. (b) Record the sale of the equipment. (c) Assuming that the equipment had been sold for \$25,000 cash, prepare the entry to record the sale.
 Si.No Date Debit Credit A 1 year back Depreciation 20000 Accumulated depreciation 20000 Current Depreciation 10000 Accumulated depreciation 10000 B Cash 60000 Accumulated depreciation 130000 Computer Equipment 170000 Gain on Sale of computer 20000 c Cash 25000 Accumulated depreciation 130000 Loss on Sale of computer 15000 Computer Equipment 170000

6

 (a) Determine the depletion rate. (b) Determine the amount of depletion expense for the current year. (c) Journalize the adjusting entry to recognize the depletion expense Estimated deposites 60,00,000.00 Cost of Mineral rights 6,00,00,000.00 Depletion Rate per Tonne 10.00 Diamonds mined in current year 23,00,000.00 Depletion for current Year 2,30,00,000.00
 Date Debit Credit 31-Dec Depletion 2,30,00,000.00 Accumulated Depletion-Mineral Rights 2,30,00,000.00

 Date Debit Credit 31-dec Amortization (36000*6/(12*15)) 1200 Patents 1200

 Date Debit Credit 15-May Accounts payble 10000 Note payable 10000 12-Sep Note payable 10000 Interest on note 200 Cash 10200

1. Journalize the necessary entries related to payroll:

(a) This is the first payroll of the year and the employee has no cumulative earnings for the year to date.

 Date Debit Credit Salaries 1980 Cash 878.53 Federal Income tax Payble 950 social security tax 122.76 Medicare 28.71

 (a) Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense. (b) Journalize the entry to record the warranty work provided in October.
 Date Debit Credit 30-Sep Warranty Expense 20425 Allowance for warranty claims 20425 31-Oct Allowance for warranty claims 280 Labor 65 Spares 215

 Date Debit Credit A Accounts Recievable 46500 Equipment 58000 Allowance for doubtful debt 2000 Jesse’s Investment 102500 B Cash 21000 Inventory 48000 Tim’s Investment 69000

1. Annual salary allowance to Emmett of \$48,000
2. Interest of 8% on each partner’s capital balance on January 1
3. Any remaining net income divided equally

Emmett and Sierra had \$25,000 and \$140,000, respectively, in their January 1 capital balances.  Net income for the year was \$200,000.

How much net income should be distributed to Emmett?

 Salary of emmett 48000 interest on capital of emmett 2000 Share of net income 69400 Total Income of Emmett 119400

1. evaluation.Required
 (1) Provide the journal entry for the asset revaluation. (2) Provide the journal entry for Fredericks’ admission under the following independent situations: (a) Fredericks purchased a 20% interest for \$50,000. (b) Fredericks purchased a 30% interest for \$125,000.
 Date Debit Credit 1 Stephen’s Capital 4000 Perez’capital 4000 Equipment 8000 2 (A) Perez’capital 44500 Stephen’s Capital 5500 Fredricks Capital 50000 2 (B) Perez’capital 82000 Stephen’s Capital 43000 Fredricks Capital 125000

1. Journalize the entries to record the liquidation outlined below, using Assets as the account title for the noncash assets and Liabilities as the account title for all creditors’ claims.
 (a) Sold the noncash assets for \$80,000 in cash. (b) Divided the loss on realization. (c) Paid the liabilities. (d) Received cash from the partner with the deficiency. (e) Distributed the cash to the partners.
 Date Debit Credit A) Cash 80000 Loss on realization 80000 Non Cash Asset 160000 B Micco 32000 Niccum 32000 Orwell 16000 Loss on Realization 80000 C Liabilities 50000 Cash 50000 D Cash 12000 Niccum 12000 E Micco 16800 Niccum 16800 Orwell 8400 Cash 42000

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