Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 9, Problem 9.38BP
Recording lump-sum asset purchases, depreciation, and disposals
Granny Carney Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate
Jan. 1 | Purchased office equipment, $112,000. Paid $78,000 cash and financed the remaining with a note payable. |
Apr. 1 | Acquired land and communication equipment in a lump-sum purchase. Total cost was $41 0,000 paid in cash. An independent appraisal valued the land at $322,875 and the communication equipment at $107,625. |
Sep. 1 | Sold a building that cost $540,000 (accumulated depreciation of $240,000 through December 31 of the preceding year). Granny Carney received $360,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $60,000. |
Dec. 31 | Recorded depreciation as follows: Communication equipment is Office equipment is depreciated using the double-declining-balance method over five years with a $5,000 residual value. |
Record the transactions in the journal of Granny Carney Associates.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Recording lump-sum asset purchases, depreciation, and disposals
Whitney Plumb Associates surveys American eating habits. The company’s account; include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each asset. During 2018, Whitney Plumb completed the following transactions:
Record the transactions in the journal of Whitney Plumb Associates.
Recording Transactions and Adjustments for Tangible and Intangible Asset The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. Paid $88,000 cash to purchase storage shed components. Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000 Paid $31,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $5,000. Paid $300 cash for repairs to the pickup truck. Paid $27,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining usefut life of five years Recorded depreciation and amortization on the pickup…
Cost of Assets, Subsequent Book Values, and Balance Sheet Presentation
The following events took place at Pete's Painting Company during 2017:
a. On January 1, Pete bought a used truck for $15,000. He added a tool chest and side racks for ladders for $4,600. The truck is expected to last four years and then be sold for $1,200. Pete uses straight-line depreciation.
b. On January 1, he purchased several items at an auction for $2,925. These items had fair market values as follows:
10 cases of paint trays and roller covers
$200
Storage cabinets
900
Ladders and scaffolding
2,800
Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years.
c. On February 1, Pete paid the city $1,440 for a three-year license to operate the business.
d. On September 1, Pete sold an old truck for $4,280 that had cost $11,060 when it was purchased on September 1, 2012. It was expected to last eight years and have…
Chapter 9 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
Ch. 9 - Prob. 1QCCh. 9 - Prob. 2QCCh. 9 - Which method almost always produces the most...Ch. 9 - A Celty Airline jet costs 28,000,000 and is...Ch. 9 - A copy machine costs 45,000 when new and has...Ch. 9 - Suppose Print and Photo Center in the preceding...Ch. 9 - Prob. 7QCCh. 9 - Prob. 8QCCh. 9 - Liberty Corporation reported beginning and ending...Ch. 9 - A truck costs 50,000 when new and has accumulated...
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - What is the difference between a capital...Ch. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - How does a business decide which depreciation...Ch. 9 - Prob. 10RQCh. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - How is gain o r loss determined when disposing of...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - Prob. 17RQCh. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - What does it mean if an exchange of plant assets...Ch. 9 - Determining the cost of an asset Alton Clothing...Ch. 9 - Prob. 9.2SECh. 9 - Prob. 9.3SECh. 9 - Computing second-year depreciation and accumulated...Ch. 9 - Calculating partial-year depreciation On September...Ch. 9 - Prob. 9.6SECh. 9 - Prob. 9.7SECh. 9 - Discarding an asset On May 31, 2016, Choice...Ch. 9 - Selling an asset at gain or loss Mill Creek Golf...Ch. 9 - Selling an asset at gain or loss Pelman Company...Ch. 9 - Accounting for depletion of natural resources...Ch. 9 - Accounting for an intangible asset On March 1,...Ch. 9 - Prob. 9.13SECh. 9 - Prob. 9.14SECh. 9 - Prob. 9.15SECh. 9 - Prob. 9.16SECh. 9 - Prob. 9.17ECh. 9 - Making a lump-sum purchase of assets Dearwood...Ch. 9 - Prob. 9.19ECh. 9 - Computing depreciation-three methods Crackling...Ch. 9 - Changing an asset's useful life and residual value...Ch. 9 - Recording partial-year depreciation and sale of an...Ch. 9 - Prob. 9.23ECh. 9 - Prob. 9.24ECh. 9 - Prob. 9.25ECh. 9 - Prob. 9.26ECh. 9 - Computing asset turnover ratio Snap Dragon Photo...Ch. 9 - Prob. 9.28ECh. 9 - Measuring asset cost, units-of-production...Ch. 9 - Prob. 9.30APCh. 9 - Determining asset cost, recording first-year...Ch. 9 - Recording lump-sum asset purchases, depreciation,...Ch. 9 - Prob. 9.33APCh. 9 - Prob. 9.34APCh. 9 - Journalizing partial-year depreciation and asset...Ch. 9 - Prob. 9.36BPCh. 9 - Determining asset cost, recording rust-year...Ch. 9 - Recording lump-sum asset purchases, depreciation,...Ch. 9 - Prob. 9.39BPCh. 9 - Prob. 9.40BPCh. 9 - Journalizing partial-year depreciation and asset...Ch. 9 - Prob. 9.42CPCh. 9 - Western Bank Trust purchased land and a building...Ch. 9 - Prob. 9.1CTFCCh. 9 - Prob. 9.1CTFSCCh. 9 - In 150 words or fewer, explain the different...
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
- Depreciation Expense During 2016, Carter Company acquired three assets with the following costs, estimated useful lives, and estimated salvage values: The company uses the straight-line method to depreciate all assets and computes depreciation to the nearest month. For example, the computer system will be depreciated for six months in 2016. Required Compute the depreciation expense that Carter will record on each of the three assets for 2016. Comment on the following statement: Accountants could save time and money by simply expensing the cost of long-term assets when they are purchased. In addition, this would be more accurate because depreciation requires estimates of useful life and salvage value.arrow_forwardCost of Assets, Subsequent Book Values, and Balance Sheet Presentation The following events took place at Pete's Painting Company during 2016: On January 1, Pete bought a used truck for $16,000. He added a tool chest and side racks for ladders for $5,400. The truck is expected to last four years and then be sold for $1,000. Pete uses straight-line depreciation. On January 1, he purchased several items at an auction for $4,200. These items had fair market values as follows: 10 cases of paint trays and roller covers $200 Storage cabinets 1,800 Ladders and scaffolding 3,600 Pete will use all of the paint trays and roller covers this year. The storage cabinets are expected to last nine years; the ladders and scaffolding, four years. On February 1, Pete paid the city $1,476 for a three-year license to operate the business. On September 1, Pete sold an old truck for $5,780 that had cost $14,720 when it was purchased on September 1, 2011. It was expected to last eight years and…arrow_forwardRecording Asset Acquisition, Depreciation, and Disposal On January 2, 2016, Verdi Company acquired a machine for $75,000. In addition to the purchase price, Verdi spent $2,100 for shipping and installation, and $2,600 to calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and a residual value of $11,000. Required a. Prepare journal entries to record the acquisition costs. Description Debit + → b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016. Description Credit Cash ◆ ◆ Accumulated depreciation c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale. Credit Description Debit Credit Debit ◆ ♦arrow_forward
- FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT WRITTEN WORKS: Compute the depreciation expense for the following independent cases. Use the straight line method of depreciation. 1.) Pedro Reyes purchased a delivery vehicle on January 1, 2016 amounting to PHP250,000. It is estimated that the vehicle will be useful for 10 years. The vehicle can be solved for PHP 10,000 at the end of its useful life. If the accounting period being reported by Pedro is one (1) year from January - December 2016, how much is the depreciation expense? 2.) Pedro Reyes purchased a delivery vehicle on April 1, 2016 amounting to PHP250,000. It is estimated that the vehicle will be useful for 10 years. The vehicle can be solved for PHP 10,000 at the end of its useful life. If the accounting period being reported by Pedro is one (1) year from January - December 2016, how much is the depreciation expense? 3.) Pedro Reyes purchased a delivery vehicle on January 1, 2016 amounting to PHP250,000. It is estimated…arrow_forwardB. D E G H. J K 3. Create the fixed asset supporting schedule for the following purchases: Two fixed assets are purchased during the year: Computer server on 5/4/2014 for $2,214.55 Office furniture on 11/17/2014 for $1,234.54 MACRS 150% is going to be the depreciation method used and depreciation adjusting entries are made at the end of each month. (check figure: total depreciation expense = 107.63) What will be the depreciation general journal adjusting entry on 12/31/2014?arrow_forwardDanube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their 2015 annual reports. Type of Intangible Asset Danube Toggle ConnectOn Developed Technology 3.5 10.0 2.5 Trade Names 2.3 4.6 1.2 Customer Relationships 2.1 6.2 3.1 Assume each company spent $840,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company’s Income from Operations in the current year.arrow_forward
- A copier was purchased for $7,211.45 on February 3, 2015. 200% MACRS is the method used to depreciate this copier and the depreciation is recorded at the end of each month. On August 27, 2015, the copier breaks and a cash refund of $6,200.00 is provided. Create the general journal entry to record the assest disposal of this copier (check figure: Loss on Asset Disposal = $224.75)arrow_forwardDiego Company paid $186,000 cash to acquire a group of items consisting of land appraised at $53,000 and a building appraised at $159,00O. Allocate total cost to these two assets and prepare an entry to record the purchase. Complete this question by entering your answers General Total Cost Journal Prepare an entry to record the purchase. View transaction list Journal entry worksheet A Record costs of lump-sum purchase. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View genera Total Cost General Journarrow_forwardTitle Prepare journal entries for each of the following transactions or events for Liu Cybersystems: Description Journal entries for depreciation and amortization expense Prepare journal entries for each of the following transactions or events for Liu Cybersystems: (a) Acquired computers costing $800 000 and software costing $80 000 on 1 January 2011. Liu expects the computers to have a service life of 10 years and $80 000 residual value. The software is expected to have a service life of four years and zero residual value. (b) Paid $40 000 to install the computers at Liu’s office. Paid $20 000 to test the software. (c) Liu records depreciation and amortization expense for the computers and the computer software using the straight-line method for 2011 and 2012.arrow_forward
- Current Attempt in Progress Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2016. It has been depreciated using the straight-line method based on an estimated salvage value of $5,000 and an estimated useful life of 5 years. Accumulated deprecation was last adjusted on December 31, 2018.Prepare Pryce Company’s journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) Sold for $31,000 on January 1, 2019. (b) Sold for $31,000 on May 1, 2019. (c) Sold for $11,000 on January 1, 2019. (d) Sold for $11,000 on October 1, 2019.arrow_forwardDiego Company paid $186,000 cash to acquire a group of items consisting of land appraised at $53,000 and a building appraised at $159,000. Allocate total cost to these two assets and prepare an entry to record the purchase. Complete this question by entering your answers General Total Cost Journal Prepare an entry to record the purchase. View transaction list Journal entry worksheet A Record costs of lump-sum purchase. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View generalarrow_forwardA company maintains its non-current assets at cost. Accumulated provision for depreciation accounts are kept for each asset. As at December 2014, the position was as follows: Total Cost To Date Total Depreciation To Date RM RM Machinery 59.950 25,670 Office Furniture 2,860 1,490 The following transactions were made in the year ended 31 December 2015: Purchased machinery RM 2,480 and office furniture RM 320 Sold machinery which had cost RM 2,800 in 2011 for RM 800. Depreciation is charged on a straight line basis at 10 percent on machinery and 5 percent on office furniture. Required: Prepare the asset and accumulated depreciation accounts for the year ending at 31 December 2015. The extract of Statement of Financial Position at that date.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Property, Plant and Equipment (PP&E) - Introduction to PPE; Author: Gleim Accounting;https://www.youtube.com/watch?v=e_Hx-e-h9M4;License: Standard Youtube License