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Jada Company had the following transactions during the year: • Purchased a machine for $500,000 using a long-term note to finance it • Paid $500 for ordinary repair • Purchased a patent for $45,000 cash • Paid $200,000 cash for addition to an existing building • Paid $60,000 for monthly salaries • Paid $250 for routine maintenance on equipment • Paid $10,000 for major repairs • Depreciation expense recorded for the year is $25,000 If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jada’s balance sheet resulting from this year’s transactions? What amount did Jada report on the income statement for expenses for the year?

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 5PA
Textbook Problem
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Jada Company had the following transactions during the year:

• Purchased a machine for $500,000 using a long-term note to finance it

• Paid $500 for ordinary repair

• Purchased a patent for $45,000 cash

• Paid $200,000 cash for addition to an existing building

• Paid $60,000 for monthly salaries

• Paid $250 for routine maintenance on equipment

• Paid $10,000 for major repairs

• Depreciation expense recorded for the year is $25,000

If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jada’s balance sheet resulting from this year’s transactions? What amount did Jada report on the income statement for expenses for the year?

To determine

Introduction:

Financial statements are the financial performance indicator of a company, which discloses the profits and losses of the company and the position of assets and liabilities of the company at the end of the year.

To compute:

The increase in amount of property, plant and equipment to be shown in balance sheet and increased amount to be charged to income statement for the year by Company J.

Explanation of Solution

Calculation of increase in amount of property, plant and equipment to be disclosed in the balance sheet for the year by Company J:

Particulars Amount ($)
Machinery purchased for using a long-term note 500,000
Add: Purchased a patent 45,000
Paid cash for addition to an existing building 200,000
Paid cash for extraordinary repairs 10,000
Less: Depreciation expense for the year ($25,000)
Total increase in amount of property, plant and equipment to be shown in balance sheet

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Chapter 11 Solutions

Principles of Accounting Volume 1
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