On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record

Minicase 3:  On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record. Assume all assets were purchased on January 1.

Equipment Cost Salvage Date Life Method of Depreciation
Machine 1 $65,000 $5,000 2002 5 DDB
Building #3 $900,000 not including land $50,000 2004 25 S/L
Mine 316 $1,000,000 $0 2003 1,000,000 tons 30,000 tons extracted
Mine 682 $500,000 $100,000 2001 40,000 barrels 6,000 barrels extracted
Patent $50,000 0 2004 17
Truck 1 $35,000 $3,000 2004 200,000 miles Units of production: total miles depreciated to date are 60,000 as of January 1, 2006. Miles this year 30,000
Truck 2 $50,000 $5,000 2006 150,000 miles Units of production, miles this year are 15,000
Truck 3 $75,000 $10,000 2001 200,000 miles Units of production: total miles depreciated to date are 180,000 as of January 1, 2006. Miles in 2006 are 30,000 miles.
Machine 2 $100,000 $5,000 2003 10 S/L

REQUIRED:
• Compute the depletion, amortization, and depreciation expense on December 31, 2006 for each asset listed above.
• Record the entries for the assets above
• Suppose that we sold machine 2 for $50,000, record the entry
• Suppose that the building life increased from 25 years to 30 years, revise the depreciation and prepare the entry.
• Suppose that the corporation spent $20,000 in 2006 to defend the patent. Record the entry.

Click here for the solution: On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record

Prepare entries to record the following transactions

1. Prepare entries to record the following transactions:
(a) a $5,000 cash investment made by the owner of a business.
(b) $1,700 in revenue earned on account.
(c) $2,500 of cash received in advance.
(d) $750 of advertising paid in advance.
(e) a $1,950 withdrawal
(f) the collection of $650 in cash on account.
(g) $275 of supplies purchased on account.
(h) $420 of utilities expense owed.
(i) a $215 cash payment made on account.
(j) $700 of revenue earned in cash.

2. Before any adjustments have been recorded, unearned rent has a normal balance of $57. If $18 of rent remains unearned at year end, prepare the the adjusting entry to record rental income earned.

3. On October 1 of the current year, a business prepaid $12 of property tax, in advance, for the next 12 months. As of December 31, it owed but had not yet recorded $6 in wages due in January of the following year. Prepare any adjusting and closing entries you think are needed at year end.

4. What would the normal balance be of a liability account a post closing trial balance? A revenue account? Drawing? Explain.

Click here for the solution: Prepare entries to record the following transactions

Record the following transactions using the accounting equation

1. Record the following transactions using the accounting equation.

Example:
Assets = Liabilities + Equity
XXXX(cash) XXXX(accounts payable)

A. Amanda invests $17,000 cash into her merchandising business.
B. She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
C. Additional purchases were supplies for $35,000 on account from various suppliers.


Click here for the solution: Record the following transactions using the accounting equation

Record the necessary journal entries from the following bank reconciliation information for July 31, 2011

10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:

Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense


Click here for the solution: Record the necessary journal entries from the following bank reconciliation information for July 31, 2011

The entry to record the cost of inventory sold includes a credit to cost of goods sold

1. The entry to record the cost of inventory sold includes a credit to cost of goods sold.

2. The faster the sale of inventory and the collection of cash, the higher the profits will be for a business.

3. In the closing entry process, the sales returns and allowances account is credited.

4. Operating expenses are divided into administrative expenses and selling expenses on the income statement.

5. A merchandiser purchases inventory on account under a perpetual inventory system with terms of 2/10 n/30. The merchandiser would:

Question 6
Ending inventory equals the number of units on hand multiplied by the unit cost.

Question 7
Sales revenue minus sales returns and allowances and sales discounts equals

Question 8
Under a perpetual inventory system, the adjusting entry to account for inventory shrinkage would include a:

Question 9
In period of increasing prices, FIFO produces lower cost of goods sold and higher gross profit than LIFO.

Question 10
An error in ending inventory carries over into the next period.

Question 11
Which of the following inventory costing methods is the LEAST likely to mimic the actual physical flow of inventory?

Question 12
Which of the following principles require the application of the lower-of-cost-or-market rule?

Question 13
A company makes two errors in the physical count of inventory. Beginning inventory was understated by $28,000 and ending inventory is understated by $43,000. Which of the following will be the net effect of the two errors?

Question 14
A deposit in transit has been recorded by the company but not by the bank.

Question 15
To maintain effective internal control, all incoming mail should be opened by a mailroom employee who has access to the accounting records.

Question 16
The initial entry to establish a petty cash fund involves a debit to cash and a credit to petty cash.

Question 17
Internal control does not:

Question 18
A check drawn by the depositor for $205 in payment of a liability was recorded in the journal as $502. This item would be included in the bank reconciliation as a(n):

Question 19
The entry to reimburse the petty cash fund includes a:

Question 20
Under the allowance method, the entry to write off an account that has been deemed uncollectible has no effect on the total asset's of the firm.

Question 21
The allowance method and the direct write-off method are both methods of aging accounts

Question 22
A written promise to pay a specified amount of money at a particular future date is referred to as a promissory note.

Question 23
One method of establishing control over collections of accounts receivable is to:

Question 24
Using the balance sheet approach to estimate uncollectibles, accounts, which are 90 days old,are:

Question 25
Under the direct write-off method, the entry to record an uncollectible account has the following effect on the financial statements:


Click here for the solution: The entry to record the cost of inventory sold includes a credit to cost of goods sold

Property Tax- Record the following transactions in the general ledger account of the Coleman County General Fund

Property Tax- Record the following transactions in the general ledger account of the Coleman County General Fund.
1. Coleman County levied its 20x7 property tax on Jan 1, 20x7. The total tax levy was 80,000,000; 2% is expected to be uncollectible.
2. Coleman collected 55,000,000 of property taxes before the due date. The remaining taxes are past due.
3. Interest and penalties 0f 2,500,000 were assessed on the past due taxes. 6% is expected to be uncollectible.
4. Coleman County collected 20,000,m0000 of delinquent taxes and 2,000,000 of interest and penalties at the end of 20x7, Coleman estimates that it will collect 3,000,000 of delinquent taxes and 300,000 of the previously accrued interest and penalties in the first 60 days of 20x8.


Click here for the solution: Property Tax- Record the following transactions in the general ledger account of the Coleman County General Fund

LoBianco Company's record of transactions for the month of April was as follows

LoBianco Company's record of transactions for the month of April was as follows.

Purchases Sales
(Balance on hand)
April 1 600 @ $7.43 April 3 500 @ $12.39
4 1,500 @ $7.53 9 1,300 @ $12.39
8 800 @ $7.93 11 600 @ $13.63
13 1,200 @ $8.05 23 1,200 @ $13.63
21 700 @ $8.18 27 900 @ $14.87
29 500 @ $8.41 ______
______ 4,500
5,300

(a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average cost.
(b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.
(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
(d) In an inflationary period, which inventory method–FIFO, LIFO, average cost–will show the highest net income?


Click here for the solution: LoBianco Company's record of transactions for the month of April was as follows

Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co

Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co.

(a) On April 1, 2009, Quirk issued $500,000, 9% bonds for $537,868 including accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2019.
(b) On July 1, 2011 Quirk retired $150,000 of the bonds at 102 plus accrued interest. Quirk uses straight-line amortization.


Click here for the solution: Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co

We record and report most changes in accounting principle retrospectively, but sometimes report the changes prospectively

We record and report most changes in accounting principle retrospectively, but sometimes report the changes prospectively. Explain when it is appropriate to report the changes prospectively. Provide examples.

Click here for the solution: We record and report most changes in accounting principle retrospectively, but sometimes report the changes prospectively

LoBianco Company’s record of transactions for the month of April was as follows

E8-14 (FIFO, LIFO, and Average Cost Determination) LoBianco Company’s record of transactions for the month of April was as follows.

Purchases Sales
April 1 (balance on hand) 600 @ $6.00 April 3 500 @ $10.00
4 1,500 @ 6.08 9 1,300 @ 10.00
8 800 @ 6.40 11 600 @ 11.00
13 1,200 @ 6.50 23 1,200 @ 11.00
21 700 @ 6.60 27 900@ 12.00
29 500 @ 6.79 4,500
5,300

Instructions
(a) Assuming that periodic inventory records are kept, compute the inventory at April 30 using (1) LIFO and (2) average cost.
(b) Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using (1) FIFO and (2) LIFO.
(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
(d) In an inflationary period, which inventory method—FIFO, LIFO, average cost—will show the highest net income?

Click here for the solution: LoBianco Company’s record of transactions for the month of April was as follows

Prepare the journal entries to record the following transactions in an Investment Trust Fund for Seggen County during the calendar year 2013

(Journal Entries for an Investment Trust Fund) Prepare the journal entries to record the following transactions in an Investment Trust Fund for Seggen County during the calendar year 2013.

1. Turtle Creek and Pineview contributed $60,000 and $40,000, respectively, to an Investment Trust Fund operated by Seggen County during 2013.

2. Investments totaling $75,000 were purchased.

3. Income from the investments during the year totaled $8,000.

4. The fund paid $1,500 to the county for investment management fees.

5. The investments increased in value by $3,000.

6. Income of $10,000 was paid to the two cities, based on the relative amount of their initial investment.

Click here for the solution: Prepare the journal entries to record the following transactions in an Investment Trust Fund for Seggen County during the calendar year 2013