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Journal Entries - SASA Company - Wearing Out Company - Accounting and Finance Assignment Help

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    1BBFAF

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    Canada

 Journal Entries Accounting and Finance Assignment Help
Assignment Task:

Question #1
SASA Company made the following expenditures in connection with the construction of
its new soccer facility:

Architect’s fees                                                                                              $ 16,000
Cash paid for land and old building                                                                260,000
Removal of old building                                                                                  38,000
Survey to site the new building                                                                      12,000
Legal fees for title search                                                                               1800
Excavation for construction of basement                                                       3,000
Machinery purchased                                                                                    142,000
Storage charges on machinery because building                                          1000
was not ready when machinery was delivered

 

Freight on machinery purchased                                                                   3,000
Hauling charges to deliver machinery from storage to new building             1000

 

Construction costs of new building                                                                 1,224,000
Landscaping                                                                                                   13,000
Installation of machinery                                                                                 17,000

REQUIRED:
Prepare a schedule showing the amounts to be recorded as Land, Building, Machinery and Equipment, and Expenses.

 

Question #2 
Wearing Out Company recently negotiated a lump-sum purchase of several assets from a road equipment dealer who was planning to change locations. The purchase was completed on March 10, 2018, at a total cash price of $800,000 and included a garage with land and certain land improvements and a new heavy, general-purpose truck. The estimated fair market values of the assets were: garage, $450,000; land, $270,000; land improvements, $135,000; and truck, $45,000. Wearing Out Company’s year-end is December 31.

REQUIRED:
1. Prepare a schedule to allocate the lump-sum purchase price to separate assets that were purchased. Also present the general journal entry to record the purchase.

2. Calculate the 2019 depreciation expense on the garage using the straight-line method and assuming a 15-year life and a $37,500 salvage value.

3. Calculate the 2018 depreciation expense on the land improvements assuming an 8-year life and double-declining-balance depreciation.

4. The truck is expected to last 5 years and have a salvage value of $5,000. Prepare a schedule showing each year's depreciation on the truck, assuming (a) 5-year straight-line depreciation and (b) double-declining-balance depreciation.

Question #3 
On January 1, 2018, Birdie purchased a used piece of equipment for $65,000. The next day, it was repaired at a cost of $2,000 and mounted on a new platform that cost
$2,400. It was estimated that the equipment would be used for four years and would then have a $9,000 residual value. Depreciation was to be charged on a straight-line
basis to the nearest whole month. A full year’s depreciation was charged on December 31, 2018, through December 31, 2019, and on April 1, 2020, the equipment was retired from service.

REQUIRED:
1. Prepare the journal entries to record the purchase of the equipment, the cost of repairing it, and the installation. Assume that cash was paid.

2. Prepare entries to record depreciation on the equipment on December 31, 2018 and on April 1, 2020.

3. Prepare entries to record the retirement of the equipment under each of the following unrelated assumptions:
a) It was sold for $15,000.
b) It was sold for $50,000.

Question #4 
On January 1, 2018, Devour & Engulf Co. paid $1,657,500 for the mineral rights to an oil shale deposit containing an estimated 390,000 barrels of oil. The company also installed equipment on the site at a cost of $1,150,500 with no expected salvage value, capable of removing the oil shale in six years. The equipment will be abandoned when the oil shale is completed depleted. The company chooses to use a "Units of Production" approach to depreciate its PPE assets at the site. Devour & Engulf began operations on June 1, and extracted and sold 35,000 barrels of oil during the remaining seven months of the year.

REQUIRED:
Give the entries to record the December 31, 2018 amortization of the oil shale mineral rights and depreciation of the equipment.

Question #5 
Classify each of the following items as either:
(a) Estimated liability
(b) Contingent liability
(c) Ordinary current liability
_______ (1) Lawsuit against the firm
_______ (2) Warranty on $150,000 worth of canoes
_______ (3) Accounts payable
_______ (4) Income taxes payable
_______ (5) Vacation benefits
_______ (6) Operating lease
_______ (7) Debt guarantees
_______ (8) Property taxes payable
_______ (9) Payroll taxes payable
_______ (10) Unearned revenues

Question #6 
N. Bondage Company borrowed $125,000 on October 17, 2018 by issuing a note payable for 120 days at 6%. N. Bondage Company has a calendar year end and does
not make reversing entries.

REQUIRED:

Prepare the following journal entries:
1. The issuance of the note on October 17, 2018.
2. Adjusting entry on December 31, 2018
3. The payment of the note on __________? (Provide date and entry)

Question #7 
SIAST Corporation has a December 31 year-end. The company sells calculators and provides a lifetime warranty on their product. Using past experience they estimate that 2% of calculators sold will be returned for replacement. The replacement cost of one calculator is $25. During 2018 the total sales for SIAST Corporation was $650,000 or 13,000 calculators sold at $50 per unit. On January 10, 2019, thirty calculators were returned and replaced under the warranty.

REQUIRED:
1. Prepare the journal entry to record the estimated warranty for 2018 on December 31.
2. Prepare the journal entry to record the replacement of the calculators on January 10, 2019.

Question 8 
Campbell Construction, located in Moose Jaw, Saskatchewan has a December 31 year-end and prepares financial statements annually. They have gathered the following
information to prepare the current year’s statements.
1. The payroll register showed the following total unpaid amounts as at December 31

 Journal Entries Accounting and Finance Assignment Help

2. Services provided to customers for the month of December were $5,000. These services are taxable and are on account and not recorded. The PST in Saskatchewan is 6% and the GST is 5%.

3. On September 1 a client paid $4,000 in advance for services from September 1 to January 31. This amount was credited to the Unearned Revenue account.

4. The power bill for December in the amount of $125 was received but is unpaid and unrecorded.

5. The company had recorded estimated income taxes each month at the rate of 27% of income before taxes. Total income before taxes for the year was $652,000. At year-end the actual income tax expense has been determined to be $185,500. The actual amount has not been adjusted to the accounts.

REQUIRED:
Using the above information, prepare the journal entries on December 31 for Campbell Construction.

Question 9 
On December 31, 2018, Below Zero Company borrowed $75,000 by signing an 11% installment note payable that is to be repaid with six equal annual payments. The first
payment is to be made on December 31, 2019.

REQUIRED:
1. Give the journal entry to record the issuance of the note payable.
2. Give the journal entry to record the first installment payment on December 31, 2019
3. Give the journal entry to record the second installment payment on December 31, 2020.

 

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  • Uploaded By : Noah
  • Posted on : October 03rd, 2018
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