FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
Presented below is information related to Cramer, Inc.
Instructions
Comment on the appropriateness of the accounting procedures followed by Cramer, Inc.
a.
| Retained Earnings | 60,000 | ||||
| |
60,000 |
b. Materials were purchased on January 1, 2020, for $120,000 and this amount was entered in the Materials account. On December 31, 2020, the materials would have cost $141,000, so the following entry is made.
| Inventory | 21,000 | ||||
| Gain on Inventories | 21,000 |
c. During the year, the company purchased equipment through the issuance of common stock. The stock had a par value of $135,000 and a fair value of $450,000. The fair value of the equipment was not easily determinable. The company recorded this transaction as follows.
| Equipment | 135,000 | ||||
| Common Stock | 135,000 |
d. During the year, the company sold certain equipment for $285,000, recognizing a gain of $69,000. Because the controller believed that new equipment would be needed in the near future, she decided to defer the gain and amortize it over the life of any new equipment purchased.
e. An order for $61,500 has been received from a customer for products on hand. This order was shipped on January 9, 2021. The company made the following entry in 2020.
| Accounts Receivable | 61,500 | ||||
| Sales Revenue |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following transactions were completed by SloMo Company during a 3-year period. All transactions are related to the use of fixed assets. The double-declining method of depreciation is used. Year 1: Jan. 3 Oct. 2 Dec. 31 Year 2: Feb. 6 Mar. 31 Nov. 2 Dec. 31 Year 3: Jun. 1 Nov. 2 Dec. 31 Bought a used piece of manufacturing equipment for $30,000. Paid cash for the equipment. Paid a repair company $725 for maintenance and repairs to the equipment. Recorded depreciation on the equipment for the year. The estimated useful life of the equipment is 5 years, with a residual value of $5,000. Bought a new piece of manufacturing equipment for $60,000. Paid cash for the equipment. Sold the used piece of manufacturing equipment for $15,000. (Record depreciation to date in Year 2 for the equipment.) Paid the repair company $250 for repairs to the equipment. Record depreciation for the new manufacturing equipment. It has an estimated residual value of $10,000 and a useful life of 5 years. Bought…arrow_forwardComputer equipment was acquired at the beginning of the year at a cost of $57,500 that has an estimated residual value of $3,500 and an estimated useful life of 5 years. a. Determine the depreciable cost.fill in the blank 1 of 1$ b. Determine the double-declining-balance rate.fill in the blank 1 of 1 % c. Determine the double-declining-balance depreciation for the first year.fill in the blank 1 of 1$arrow_forwardAZ Inc. purchased Equipment on January 1 for $80,000. This equipment is depreciated using the straight line method with a salvage value of $4,000 and a five year estimated useful life. Show your work where applicable. a. How much depreciation expense would be reported each year for this equipment b. What is the total accumulated depreciation on Equipment at the end of year 2 A/ C. In which Financial Statement would Equipment be presented in? (Balance Sheet, Income Statement, Statement of Retained Earnings, Cash Flow Statement) A/ d. What would be the total value reported for Equipment in this A/ Financial Statement at the end of year 5arrow_forward
- Perdue Company purchased equipment on April 1 for $59,940. The equipment was expected to have a useful life of three years, or 4,320 operating hours, and a residual value of $1,620. The equipment was used for 800 hours during Year 1, 1,500 hours in Year 2, 1,300 hours in Year 3, and 720 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 $fill in the blank 1 Year 2 $fill in the blank 2 Year 3 $fill in the blank 3 Year 4 $fill in the blank 4 b. Units-of-activity method Year Amount Year 1 $fill in the blank 5 Year 2 $fill in the blank 6 Year 3 $fill in the blank 7 Year 4 $fill in the…arrow_forwardA storage tank acquired at the beginning of the fiscal year at a cost of $95,000 has an estimated residual value of $5,000 and an estimated useful life of 25 years. a. Determine the amount of annual depreciation by the straight-line method.$ b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar. Depreciation Year 1 $ Year 2 $arrow_forwardSelect financial information for Logistical Corp. as at December 31, 20X6, follows: Please find the attached image Additional information is as follows: • During the year, Logistical sold equipment for proceeds of $50,000. The equipment had a cost of $80,000 and accumulated depreciation of $35,000.• During the year, a review of Logistical’s goodwill was completed, and it was determined that the asset was impaired and should be written down by $3,000.• Logistical did not purchase any additional investments in the year. Any changes in the fair value of investments have been adjusted through other comprehensive income. These securities are not cash equivalents.• During the year, a new lease was signed for equipment that had a fair market value of $45,000. Depreciation expense for the year totalled $1,000. The new lease was signed in the year, which required a $7,000 payment at the start of the lease.• Logistical elects to classify any interest paid and dividends paid as financing…arrow_forward
- Oaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment The equipment, including sales tax, was purchased on open account with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 $50,000 2,700 750 958 1,500 2 Record the purchase of equipment.arrow_forwardSale of Equipment Equipment was acquired at the beginning of the year at a cost of $587,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $47,305. a. What was the depreciation for the first year? Round your answer to the nearest cent. b. Using the rounded amount from Part a in your computation, determine the gain or loss on the sale of the equipment, assuming it was sold at the end of year eight for $100,097. Round your answer to the nearest cent. Enter your answer as a positive amount. Feedback c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.arrow_forwardEquipment was acquired at the beginning of the year at a cost of $78,840. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,860. a. What was the depreciation expense for the first year?$fill in the blank 4b6aeefb5057020_1 b. Assuming the equipment was sold at the end of the second year for $59,600, determine the gain or loss on sale of the equipment.$fill in the blank 4b6aeefb5057020_2 c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank or enter "0". - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select -arrow_forward
- Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.a. Prepare the journal entry necessary for recording the purchase of the new carpet.b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet, assuming that Willow Creek Company uses the straight-line method.arrow_forwardA building acquired at the beginning of the year at a cost of $112,000 has an estimated residual value of $7,800 and an estimated useful life of four years. Determine the following. (a) The double-declining-balance rate (b) the double declining-balance depreciation for the first yeararrow_forwardOaktree Company purchased new equipment and made the following expenditures: Purchase price Sales tax Freight charges for shipment of equipment Insurance on the equipment for the first year Installation of equipment The equipment, including sales tax, was purchased on open account with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Prepare the necessary journal entries to record the above expenditures (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 $50,000 2,700 750 958 1,500 2 Record the purchase of equipment.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education