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Acc291 Financial Accounting
Week 3 Assignments
Exercise E8-3 Hixson Company
Exercise BE9-13 Spain Company
Exercise Do It! 9-4
Exercise E9-9 Ingles Company
Exercise E9-10 Beka Company
Problem P9-5A Jimenez Company
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.
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.
Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows:
buildings $1,100,000; accumulated depreciation-buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion-coal mine $108,000.
Prepare a partial balance sheet of Spain Company for these items.
Do It! 9-4
Match the statement with the term most directly associated with it.
b. Intangible assets
c. Research and development costs
1. _________ Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.
2. _________ The allocation of the cost of an intangible asset to expense in a rational and systematic manner.
3. _________ A right to sell certain products or services, or use certain trademarks or trade names within a designated geographic area.
4. _________ Costs incurred by a company that often lead to patents or new products. These costs must be expensed as incurred.
5. _________ The excess of the cost of a company over the fair market value of the net assetsacquired.
Presented below are selected transactions at Ingles Company for 2011.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
30-Jun Sold a computer that was purchased on January 1, 2008. 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, 2007. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Journalize entries for disposal of plant assets.
Beka Company owns equipment that cost $50,000 when purchased on January 1, 2008. It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years.
Prepare Beka Company’s journal entries to record the sale of the equipment in these four independent situations.
(a) Sold for $28,000 on January 1, 2011.
(b) Sold for $28,000 on May 1, 2011.
(c) Sold for $11,000 on January 1, 2011.
(d) Sold for $11,000 on October 1, 2011.
At December 31, 2011, Jimenez Company reported the following as plant assets.
Less: Accumulated depreciation-buildings 12,100,000 16,400,000
Less: Accumulated depreciation-equipment 5,000,000 43,000,000
Total plant assets 63,400,000
During 2012, the following selected cash transactions occurred.
1-Apr Purchased land for $2,130,000.
1-May Sold equipment that cost $780,000 when purchased on January 1, 2008. The equipment was sold for $450,000.
1-Jun Sold land purchased on June 1, 2002 for $1,500,000. The land cost $400,000.
1-Jul Purchased equipment for $2,000,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2002. No salvage value was received.
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 2012.
c. Prepare the plant assets section of Jimenez’s balance sheet at December 31, 2012.