(a)
Introduction:
Journal entries in accounting means recording the transactions of a company in chronological order. It shows debit and credit balances. The totals of Debit side should always be equals to the totals of credit side.
To record:
The
(b)
Introduction:
The depletion of natural resources means the consumption of natural resources much faster than it can be renewed. These natural resources include mineral resources, ore deposits, gas deposits, oil deposits etc.
To find: The amount of oil depletion.
(c)
Introduction:
Journal entries in accounting means recording the transactions of a company in chronological order. It shows debit and credit balances. The totals of Debit side should always be equals to the totals of credit side.
To record:
The journal entry for depletion of.
(d)
Introduction:
Goodwill is an intangible asset that comes into picture when a buyer acquires an existing business. It is shown under the head of intangible asset under balance sheet. Intangible assetsarethose assets which can neither be seen nor be touched.
To state:
If the goodwill is amortized or not.
(e)
Introduction:
An item is said to be capitalized when it is recorded in the balance sheet as an asset rather than as an expense in the income and expenditure account.
To state:
The reason why land and building are capitalized separately from oil and well.
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Chapter 7 Solutions
Cornerstones of Financial Accounting
- INTANGIBLE LONG-TERM ASSETS Track Town Co. had the following transactions involving intangible assets: Jan. 1 Purchased a patent for leather soles for 10,000 and estimated its useful life to be 10 years. Apr. 1 Purchased a copyright for a design for 15,000 with a life left on the copyright of 25 years. The estimated remaining (economic) life of the copyright is five years. July 1 Signed a five-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid 50,000 to the franchisor. REQUIRED 1. Using the straight-line method, calculate the amortization of the patent, copyright, and franchise. 2. Prepare general journal entries to record the end-of-year amortizations.arrow_forwardExpenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.arrow_forwardDEPLETION: CALCULATING AND JOURNALIZING Mining Works Co. acquired a copper mine at a cost of 1,200,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,000,000 tons. (a) During the first year, 400,000 tons are mined and sold. (b) During the second year, 700,000 tons are mined and sold. REQUIRED 1. Calculate the amount of depletion expense for both years. 2. Prepare general journal entries for depletion expense.arrow_forward
- DEPLETION: CALCULATING AND JOURNALIZING Mineral Works Co. acquired a salt mine at a cost of 1,700,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,400,000 tons. (a) During the first year, 200,000 tons are mined and sold. (b) During the second year, 600,000 tons are mined and sold. REQUIRED 1. Calculate the amount of depletion expense for both years. 2. Prepare general journal entries for depletion expense.arrow_forwardWhen depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.arrow_forward
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