Name: Tran Phuong Thao

ID: 11215468
Class: Advanced Finance 63B
EXERCISES OF ACCOUNTING
CHAPTER 1: INTRODUCTION TO FINANCIAL ACCOUNTING
BE1-4:
a, E - Costs incurred for advertising = Advertising expense
b, R - Cash receive for services performed = Service revenue
c, E - Costs incurred for insurance = Insurance expense
d, E - Amounts paid to employees = Salaries expense
e, D - Cash distributed to stock holders = Dividends
f, R - Cash received in exchange for allowing the use of company’s building =
Rent revenue
g, E - Costs incurred for utilities used = Utilities expense
h, NSE - Cash purchase of equipment
i, C - Cash received from investors = Issued common stock for cash
BE1-10:
a, Accounts receivable – A
b, Salaries and wages payable – L
c, Equipment – A
d, Supplies – A
e, Common stock – SE
d, Notes payable – L

E1-11:
a,
Retained earnings – SE Bonds payable – L
Cost of goods sold – E Inventory – A
Selling and administrative expense – E Sales revenue – R
Cash – A Accounts payable – L
Notes payable – L Common stock – SE
Interest expense – E Income tax expense – E

b,
KELLOG COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
(in millions)
Revenues
Sales Revenue……………………………………………………..$12,575
Expenses
Cost of goods sold…………………………………….$7,184
Selling and administrative expense.…………………..3,390
Interest expense……………………………………….295
Income tax expense…………………………………...498
Total expenses………………………………………………11,367
Net income………………………………………………………………..$1,208
E1-15:
a, Assets
Cash…………………………………………………………………… $ 2,291.1
Accounts receivable…………………………………………………… 2,883.9
Inventory………………………………………………………………. 2,357.0
Equipment……………………………………………………………… 1,957.7
Buildings……………………………………………………………….. 3,759.9
Total Assets…………………………………………………………….. $13,249.6

Liabilities
Notes payable…………………………………………………………… $ 342.9
Mortage payable………………………………………………………… 1,311.5
Income taxes payable……………………………………………………. 86.3
Accounts payable………………………………………………………… 2,815.8
Total liabilities…………………………………………………………… $ 4,556.5

Stockholders’ equity
Common stock…………………………………………………………… $2,874.2
Retained earnings………………………………………………………… 5,818.9
Total stockholders’equity………………………………………………… $8,693.1
b,
Assets ($13,249.6) = Liabilities ($4,556.5) + Stockholders’ equity ($8,693.1)
c, Nike has relied more on equity than debt to finance its assets: Liabilities
financed 34% of its assets ($4,556.5/$13,249.6) compared to equity financing of
66% ($8,693.1/$13,249.6)
P1-5A:
a,1. Because the boat belongs to Miko (not to Micado Corporation), it should not
be reported on the corporation’s balance sheet. Likewise, the boat loan is Miko ‘s
personal loan so it isn’t a liability of Micado Corporation.
2.The inventory should be recorded at $25000, the amount paid when it was
purchased. Micado Corporation will record $36000 as revenues when the inventory
is sold.
3. The $10000 receivable is not an asset of the corporation, it’s an personal asset of
Miko. As a result, it shouldn’t be reported on the corporation’s balance sheet.
b,
MICADO CORPORATION
Balance sheet
December 31, 2017
Assets:
Cash……………………………………………………… $20,000
Accounts receivable……………………………………… 40,000 *
Inventory…………………………………………………. 25,000
Total assets……………………………………………….. $85,000
Liabilities and stockholders’equity
Accounts payable………………………………… $30,000
Notes payable…………………………………….. 15,000
Total liabilities…………………………………………….. $45,000
Stockholders’equity……………………………………….. 40,000 **
Total liabilities and stockholders’equity…………………... $85,000
*$50,000 -$10,000 (personal receivable of Miko)
** Stockholders’equity = Assets – Liabilities = $85,000 - $45,000
 CHAPTER 2: A FURTHER LOOK AT FINANCIAL STATEMENTS
BE2-1:
CL – Accounts payable CL – Income taxes payable
CA – Accounts receivable LTI – Investment in long-term bonds
PPE – Accumulated depreciation PPE – Land
PPE – Buildings CA – Inventory
CA – Cash IA – Patent
IA – Goodwill CA – Supplies

BE2-9:
(1) Predictive value – (a) Accounting information should help provide accurate
expectations about future events
(2) Neutral – (b) Accounting information cannot be selected, prepared, or
presented to favor one set of interested users over another
(3) Verifiable – (c) The quality of information that occurs when independent
observers, using the same methods, obtain similar results
(4) Timely – (d) Accounting information must be available to decision-makers
before it loses its capacity to influence their decisions
E2-1:
CL – Accounts payable CL – Income taxes payable
CA – Accounts receivable CA – Inventory
PPE – Accumulated depreciation CA – Stock investments
equipment PPE – Land
PPE – Buildings LTL – Mortage payable
CA – Cash CA – Supplies
CL – Interest payable PPE – Equipment
IA – Goodwill CA – Prepaid rent
E2-5:
LONGHORN CORPORATION
Balance sheet
December 31, 2017
Assets
Current assets
Cash…………………………………………….. $11,840
Accounts receivable……………………………. 12,600
Prepaid insurance………………………………. 3,200
Total current assets……………………………….. $27,640
Property, plant and equipment
Land……………………………………………... $61,200
Buildings………………………………………… 105,800
Less: Accumulated depreciation – buildings……. 45,600 60,200
Equipment……………………………………….. 82,400
Less: Accumulated depreciation – equipment…… 18,720 63,680 185,080
Total assets………………………………………….. $212,720
Liabilities and Stockholders’equity
Liabilities
Current liabilities
Accounts payable………………………………… $9,500
Interest payable…………………………………… 3,600
Current maturity of notes payable………………… 13,600
Total current liabilities………………………………... $26,700
Long- term liabilities
Notes payable……………………………………… 80,000
Total liabilities…………………………………………. 106,700
Stockholders’equity
Common stock……………………………………… $60,000
Retained earnings ($40,000 + $6,020*)…………….. 46,200
Total stockholders’equity……………………………….. 106,020
Total liabilities and stockholders’equity………………… $212,720
*Net income = $14,700 - $780 - $5300 - $2600 = $6,020

P2-3A:
LAZIUS ENTERPRISES
Income Statement
For year ended April 30,2017
Revenue
Sales revenue……………………………………………………. $5,100
Expenses
Cost of good sold………………………………………….. $1,060
Depreciation expense……………………………………… 335
Income tax expense………………………………………... 165
Insurance expense…………………………………………. 210
Interest expense……………………………………………. 400
Salaries and wage expense………………………………… 700
Total expenses……………………………………………………. $2,870
Net income……………………………………………………….. $2,230
 LAZURIS ENTERPRISES
Retained earnings statement
For the year ended April 30,2017
Retained earnings (beginning)…………………………………….. $1,600
Add: Net income…………………………………………………... 2,230
3,830
Less: Dividends……………………………………………………. 325
Retained earnings, April 30, 2017…………………………………. $3,505

LAZURIS ENTERPRISES
Balance sheet
April 30, 2017
Assets
Current assets
Cash……………………………………………… $1,270
Accounts receivable……………………………… 810
Inventory…………………………………………. 967
Prepaid insurance………………………………… 60
Stock investments………………………………… 1,200
Total current assets……………………………………… $4,307
Property, plant and equipment
Land…………………………………………………… $3,100
Equipment…………………………………………….. 2,420
Less: Accumulated depreciation-equipment………….. 670 1,750
Total property, plant and equipment………………………… $4,850
Total assets…………………………………………………… $9,157
Liabilities and Stockholders’equity
Liabilities
Current liabilities
Accounts payable………………………………………… $834
Income taxes payable…………………………………….. 135
Salaries and wages payable………………………………. 222
Total current liabilities…………………………………………... $1,191
Long – term liabilities
Mortage payable…………………………………………... $3,500
Notes payable……………………………………………… 61
Total long – term liabilities……………………………………….. $3,561
Total liabilities…………………………………………………….. $4,752
Stockholders’equity
Common stock………………………………………………. $900
Retained earnings……………………………………………. 3,505
Total stockholders’ equity………………………………………….. $4,405
Total liabilities and stockholders’equity……………………………. $9,157
 CHAPTER 3: THE ACCOUNTING INFORMATION SYSTEM
BE3-2:

Assets = Liabilities + Stockholders’ Equity

Trans Accounts Accounts Unearned Bonds + Retained earnings

Supplies
Cash + receivable payable Service payable CS
+ Rev - Exp -Div
+ + Rev + +

1 +$60,000 +$60,000

2 -$9000 -$9000

3 +$13,000 +13,000

4 +$3,100 +$3100

$67,100 $67,100
BE3-3:

Assets = Liabilities + Stockholders’ Equity

Tran + Retained earnings
s Common
Cash + Inventory+ Equip + Accounts payable +
Stock Rev - Exp -Div

+
1 -$286,176
$286,176

2 +$137,590 +$137,590

3 +$68,480 +$68,480

$206,070 $206,070
 E3-1
1. Increase in assets and increase in stockholders’ equity
2. Decrease in assets and decrease in stockholders’ equity
3. Increase in assets and increase in stockholders’ equity
4. Increase in assets and increase in liabilities
5. Decrease in assets and decrease in stockholders’ equity
6. Increase in assets and increase in liabilities
7. Increase in assets and increase in stockholders’ equity
8. Assets, liabilities and stockholders’equity stay unchanged
9. Increase in assets and increase in liabilities
E3-7: a, Note: Stockholders’ equity = SE
Trans Account Debited Account Credited

Basic Specific Effect Normal Basic Specific Effect Normal

type account Balance type account Balance

Common
1 Asset Cash Increase Debit SE Increase Credit
Stock

Decreas
2 Asset PPE Increase Debit Asset Cash Credit
e

Liabilitie Account
3 Asset Supplies Increase Debit Increase Credit
s payable
Unearned
Account Liabilitie
4 Asset Increase Debit service Increase Credit
receivable s
revenue
Decreas
5 SE Expenses Increase Debit Asset Cash Credit
e

6 Assets Cash Increase Debit SE Revenue Increase Credit

 Liabilitie Account Decreas
7 Decrease Debit Asset Cash Credit
s payable e

Decreas
8 SE Dividends Increase Debit Assets Cash Credit
e

b, General Journal
Date Account Titles and Explanation Debit Credit
First Cash $15,000
month of
Common stock $15,000
business

Equipment $10,000
Cash $10,000

Supplies $300
Account payable $300

Account receivable $3,700

Unearned service revenue $3,700

Advertising expenses $200

Cash $200

Cash $1,100
Account receivable $1,100
 Account payable $300
Cash $300
Dividends $400
Cash $400

P4-A: General Journal

Date Account Titles and Explanation Debit Credit

Mar 1 Cash $50,000

Common stock $50,000
(Issued stock for cash)
3 Land $23,000
Cash $23,000
(Purchased Snead’s Gold Land)
Buildings $9,000
Cash $9,000
(Purchased Snead’s Gold Land)
Equipment $6,000
Cash $6,000
(Purchased Snead’s Gold Land)
5 Advertising expenses $1,200
Cash (Advertised the opening of the $1,200
driving range and miniature golf course)
6 Prepaid insurance $2,400

Cash $2,400
 (Paid for 1-year insurance policy)
10 Equipment $5,500
Account payable $5,500
(Purchased golf clubs and other
equipment from Tanhoe company payable
in 1 month)
18 Cash $1,600
Services Revenue $1,600
(Fees for golf services performed)
19 Cash $2,500
Unearned service revenue $2,500
(To record unused sold coupons used for
playing golf)
25 Dividend $550
Cash $550
(Paid cash dividend)
30 Salaries $800
Cash $800
(Paid salaries)
Account payable $5,500
Cash $5,500
(Paid Tanhoe company in full for
equipment purchased on March 10)
31 Cash $900
Services Revenue $900
(Fees for golf services performed)
 CHAP 4: ACCRUAL ACCOUNTING CONCEPTS

BE4-2:

a, Prepaid insurance: If the company doesn’t make the adjustment, expenses are
understated and net income is overstated. As a result, both assets and
stockholders’equity can be overstated

b, Depreciation expense: Without the adjusting entry, total assets, total

stockholders’equity and net income can be overstated

c, Unearned service revenue: Without the adjustment, revenues and net income are
understated. Moreover, liabilities can be overstated and stockholders’equity can be
understated

d, Interest payable: If the company doesn’t make the adjusting entry, liabilities and
interest expense are understated, and net income and stockholders’ equity are
overstated

BE 4-3:

a, Accrued expenses. Before adjusting, assets are overstated, expenses are

understated and stockholders’ equity are overstated.

b, Unearned revenue. Before adjusting, liabilities are overstated and

stockholders’equity is understated.

c, Accrued interest. Before adjusting, liabilities and interest expense are

understated, and stockholders’ equity are overstated

d, Accrued revenue. Before adjusting, assets, revenues and stockholders’equity are

understated

E4-2:

10 – a 6 – e

1–b 4–f
7–c 2–g

3–d 5–h

E4-8:

a, Accrued Revenue. Before adjusting, asset and revenue understated

 Adjusting: DR Account receivable: 600

CR Revenue : 600

b, Prepaid expense. Before adjusting, expense is understated; assets are overstated

 Adjusting: DR Supplies Expenses: 1740

CR Supplies : 1740

c, Accrued expense. Before adjusting, expenses and liabilities are understated

 Adjusting: DR Utility expenses: 275

CR Trade Payable: 275

d, Unearned revenue. Before adjusting, revenue is understated; liabilities are

overstated

 Adjusting: DR unearned revenue: 490

CR revenue: 490

e, Accrued expense. Before adjusting, expenses and liabilities are understated

 Adjusting: DR Salaries and Wages expense: 620

CR Salaries and Wages payable: 620

f, Prepaid expense. Before adjusting, expense is understated; assets are overstated

 Adjusting: DR Insurance expense: 400

CR Prepaid insurance: 400

P4-3A:

General Journal
 Date Account Titles and Explanation Debit Credit

Adjusting entries
May 31

CHAPTER 5: MERCHANDISING OPERATIONS AND THE MULTIPLE –

STEP INCOME STATEMENT
BE5-3:
a,
March 2 Account receivable $800,000
Sales $800,000

Cost of goods sold $540,000

Inventory $540,000
b,
March 6 Sales returns and allowances $140,000
Account receivable $140,000
Inventory $94,000
Cost of good sold $94,000
c,
March 12 Cash $646,800
Sales Discount $13,200
Account receivable $660,000

BE5-7: a,
KAREN WEIGEL INC.
 INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
Revenues
Services Revenue…………………………………………………$62,500
Expenses
Salaries and wages expense……………………………$28,000
Advertisng expense.…………………………………… 1,800
Rent expense…………………………………………… 10,400
Utilities expense…………………………………........... 3,100
Total expenses……………………………………………… 43,300
Net income………………………………………………………………..$19,200
b,
KAREN WEIGEL INC
COMPREHENSIVE INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
Net income $19,200
Other comprehensive income
(Net of tax) 400
Comprehensive income $19,600

E5-2: General Journal

Sep 6 Inventory $1,650
Account payable $1,650

9 Inventory $50
Cash $50

10 Account payable $66

Inventory $66

12 Account receivable $690

Sales $690
Cost of goods sold $520
Inventory $520

14 Sales returns and allowances $45

Account receivable $45
Inventory $34
Cost of good sold $34
20 Account receivable $760
Sales $760

Cost of goods sold $570

Inventory $570

E5-6: a, LIEU Co.

 INCOME STATEMENT
FOR THE MONTH OF JANUARY 2017
(in millions)
Sales
Sales revenue $370,000
Less: Sales returns and allowances $20,000
Sales discounts $8,000 $28,000
Net sales $342,000
Cost of goods sold $212,000
Gross profit $130,000
Operating expenses
Salaries and wages expense $60,000
Rent expense $32,000
Insurance expense $12,000
Freight – out $7,000
Total operating expenses $111,000
Income before income taxes $19,000
Income tax expense $5,000
Net income $14,000
b,
LIEU Co.
COMPREHENSIVE INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Net income $14,000
Other comprehensive income
 (Net of $400 tax) 2000
Comprehensive income $16,000
c,
Profit margin ratio = 14,000/342,000 = 4%
Gross profit rate = 130,000/342,000 = 38%
P5-3A: a,
Date Account/Description Dr Cr
Apr. 5 Inventory $1,500
Account payable - Arnie Co. $1,500
Apr.7 Inventory $80
Cash $80
Apr.9 Account payable - Arnie Co. $200
Inventory $200
Apr.10 Account receivable $1,340
Sales $1,340
Cost of goods sold $820
Inventory $820
Apr.12 Inventory $830
Account payable - Woods Sportswear $830
Apr.14 Account payable - Arnie Co. $1,300
Cash $1,261
Inventory $39
Apr.17 Account payable - Woods Sportswear $30
Inventory $30
Apr.20 Account receivable – clothes $810
Sales $810
Cost of goods sold $550
Inventory $550
Apr.21 Account payable - Woods Sportswear $800
Cash $792
Inventory $8
Apr.27 Sale returns and allowances $80
Account receivable – clothes $80
Apr.30 Cash $1,220
Account receivable $1,220

b,
 Cash
Apr.1: $2,500 Apr.7: $80
Apr.30: $1,220 Apr.14: $1,261
Apr.21: $792
Bal: $1587
Inventory
Apr.1: $3,500 Apr.9: $200
Apr.5: $1,500 Apr.10: $820
Apr.7: $80 Apr.14: $39
Apr.12: $830 Apr.17: $30
Apr.20: $550
Apr.21: $8
Bal: $4263

Account payable
Apr.5:
Apr.9: $200 $1,500
Apr.14: $1,300 Apr.12: $830
Apr.17: $30
Apr.21: $800
Bal: 0

Account receivable
Apr.10:
$1,340 Apr.27: $80
Apr.30:
Apr.20: $810 $1,220
Bal: $850

Sales revenue
Apr.10: $1,340
Apr.20: $810
Bal: $2,150

Sale returns and allowances

Apr.27: $80
Bal: $80
 Common Stock
Apr.1: $6,000
Bal: $6,000

c,
GRANILE HILLS PRO SHOP
TRIAL BALANCE
APRIL 30, 2017
Dr Cr
Cash $1,587
Common stock $6,000
Inventory $4,263
Account payable 0
Account receivable $850
Sales revenue $2,150
Cost of goods sold $1,370
Sales returns and
allowances $80
$8,150 $8,150
d, GRANILE HILLS PRO SHOP
INCOME STATEMENT
APRIL 2017

CHAPTER 6: REPORTING AND ANALYZING INVENTORY

E6-5:
FIFO METHOD
Ending inventory
Date Units Unit Cost Total Cost
May 24 19 11 209
Cost of goods sold = $938 - $209 = $729

LIFO METHOD
Ending Inventory
Date Units Unit Cost Total Cost
May 1 19 9 171
Cost of goods sold = $938 - $171 = $767

AVERAGE – COST METHOD

Weighted – average unit cost: $938: 93 =$10.086
Cost of goods sold: $10.086 x 19 = $191.634
Ending inventory: $938 - $191.634 $746.366
E6-7:
a,
FIFO METHOD
Ending inventory
Date Units Unit Cost Total Cost
June 23 200 $7 $1,400
June 12 30 6 180 $1,580
Cost of good sold = $4,220 - $1,580 = $2,640
LIFO METHOD
Ending inventory
Date Units Unit Cost Total Cost
June 1 120 $5 $600
June 12 110 6 660 $1,260
Cost of good sold = $4,220 - $1,260 = $2,960
 AVERAGE – COST METHOD
Weighted – average unit cost: $4,220: 690 =$6.115
Ending inventory: $6.615 x 230 = $ 1,406.45
Cost of goods sold = $4,220 - $1,406.45 = $2,813.55
b,
The highest inventory cost is FIFO
The highest cost of goods sold is LIFO
c,
Ending Inventory
LIFO < Average – cost method < FIFO
Cost of goods sold:
FIFO < Average – cost method < LIFO
d,
The average cost is not $6 because the number of units purchased each times is
different.
P6-5A:
a,
(1) LIFO
+ Ending Inventory
Date Units Unit Total Cost
Cost
1 Oct 60 24 1,440
9 Oct 20 26 520
Total 1,960

+ Cost of Goods sold

Total goods available for sale: 60*$24 + 120*$26 + 100*$27+ 70*$29 = $9,290
Ending Inventory: $ 1,960
Cost of goods sold: $9,290- $1,960 =$7,330
+ Gross Profit
Gross Sale: 100*35 + 60*40 + 110*40 = $ 10,300
Net sale = Gross sale – Sale Returns, allowance, discount = $ 10,300
Gross profit = Net Sale – Cost of goods sold = $ 10,300 - $7,330 = $ 2,970
(2) FIFO
+ Ending Inventory
Date Uni/ Unit Total Cost
ts Cost
25 Oct 70 29 $ 2,030
17 Oct 10 27 $ 270
Total $ 2,300
+ Cost of Goods sold:
Total goods available for sale: 60*$24 + 120*$26 + 100*$27+ 70*$29 = $9,290
Ending Inventory: $ 2,300
Cost of goods sold: $9,290- $ 2,300 = $ 6,990
+ Gross Profit
Gross Sale: 100*35 + 60*40 + 110*40 = $ 10,300
Net sale = Gross sale – Sale Returns, allowance, discount = $ 10,300
Gross profit = Net Sale – Cost of goods sold = $ 10,300 - $ 6,990 = $ 3,310
(3) Average Cost
Average Cost = $9290/350 = $ 26.543
Ending inventory = 80 * $ 26.543 = $ 2.123
Cost of goods sold = $9290 - $ 2.123 = $ 7.167
Net Sale = $ 10,300
Gross Profit = $ 10,300 - $ 7,167 = $ 3,133
b,
Gross Profit:
LILO < Average Cost < FIFO

CHAP 8: REPORTING AND ANALYZING RECEIVABLES

BE8-3:
(a)
Jan. 14 Allowance for doubtful accounts 4,300
Account receivable 4,300
(b)
- Before the write – off: $675,000 (700,000 – 25,000)
- After the write – off: $675,000 (700000 – 4,300) – (25,000 – 4,300)
BE8-5:
a,
Bad debts expense (2% x 400,000 $5,20
– 2,800) 0
Allowance for doubtful accounts $5,200
b,
Bad debts expense (2% x 400,000 $8,90
+ 900) 0
Allowance for doubtful accounts $8,900

E8-4:
a,
Dec. 31 Bad debts expense $900
 Allowance for doubtful accounts $900

b,
Dec. 31 Bad debts expense (10% x 78,000 6,700
-1100)
Allowance for doubtful accounts 6,700
c,
Dec. 31 Bad debts expense (8% x 78,000 6,740
+500)
Allowance for doubtful accounts 6,740

E8-5:
a,
2017 Estimated percentage Estimated
Age of Accounts balance uncollectible Uncollectible
Current $65,000 2% 1,300
1-30 days past due 12,900 5 645
31-90 days past due 10,100 30 3,030
Over 90 days past
7,400
due 50 3,700
Total $95,400 8,675

b,
Mar. Bad debts expense (8,675 – 6,575
31 2,100)
Allowance for doubtful accounts 6,575

c,
Estimated uncollectible:
Current: 2017 < 2016
1-30 days past due: 2017 > 2016
31-90 days past due: 2017 > 2016
Over 90 days past due: 2017 > 2016
P8-6A
Journal
Date Description/ Accounts Dr Cr
Jan. 5 Account receivable - Rian $4,000
Sales Revenue $4,000
Feb.2 Note receivable (4 months, 9%) - Rian $4,000
Account receivable $4,000
Feb.12 Note receivable (2 months,10%) - Cato $12,000
Sales Revenue $12,000
Feb.26 Account receivable - Malcom Co. $5,200
Sales Revenue $5,200
Apr.5 Note receivable (3 months, 8%) - Malcom Co. $5,200
Sales Revenue $5,200
Apr.12 Cash $12,200
Note receivable (2 months,10%) - Cato $12,000
Interest revenue ((12,000 x 10%)/12) x 2 months $200
Jun.2 Cash $4,120
Note receivable (4 months,9%) - Cato $4,000
Interest revenue ((4000 x 9%)/12) x 4 months $120
Jun.15 Note receivables (6 months, 12%) - Geri Inc. $2,000
Sales Revenue $2,000

CHAPTER 9: REPORTING AND ANALYZING LONG-LIVED ASSETS

E9-3:
(a) Cost of land:
$80,00
Real estate 0
Demolishing old warehouse $8,200
Salvage value $1,700
Attorney's fee $1,900
Real estate broker's fee $5,200
$97,00
Total cost of land 0

(b) Architect’s fee is debited to the cost of building.

 Driveways and a parking lot: Debit to the land improvements cost.
E9-8:
Journal
Date Description/Accounts Dr Cr
Jan.1 Accumulated depreciation $62,000
Equipment $62,000
Jun. 30 (*) Cash $5,000
Accumulated depreciation – equipment $30,000
Loss on disposal $1,000
Equipment $36,000
Dec.31(**) Cash $9,000
Accumulated depreciation – delivery $16,800
Delivery $25,000
Gain on disposal $800

(*) Cost of equipment $36,000

Less: Accum. Deprec (36,000:3) x 2+ (36,000:3):12 x 6 = 30,000
Book value at date of disposal $6,000
(**
) Cost of delivery $25,000
Less: Accum. Deprec (25,000 - 4,000):5 x 4 = 16,800
Book value at date of disposal $8,200

P9-2A: (a)
Journal
Date Description/Accounts Dr Cr
$2,200,00
Apr.1 Land 0
$2,200,00
Cash 0
May.1(*
) Cash $170,000
Accumulated depreciation –
equipment $440,000
Equipment $600,000
Gain on disposal equipment $10,000
$1,600,00
Jun.1 Cash 0
Land $1,000,00
 0
Gain on disposal land $600,000
$1,100,00
Jul.1 Equipment 0
$1,100,00
Cash 0
Accumulated depreciation -
Dec.31 equipment $700,000
Equipment $700,000

(*
) Cost of equipment $600,000
Less: Accum. Deprec (600,000:10)x7+(600,000:10):12x4 = 440,000
Book value at date of disposal $220,000
(b)
Dec.31 Depreciation expense – buildings $662,500
(26,500,000:40)x1
Accumulated depreciation - buildings $662,500

Depreciation expense – equipment $3,925,000

(40,000,000 – 600,000 – 700,000):10 +
(1,100,000: 10):12 x 6
Accumulated depreciation - equipment $3,925,000

(c)

ARNOLD CORPORATION
Partial Balance sheet
December 31,2018
Plant Assets
Land 4,200,000
Equipment 39,800,000
Less: Acc. Deprec - Equipment 7,875,000 31,925,000
Builidings 26,500,000
Less: Acc. Deprec - buildings 12,587,500 13,912,500
Total Plant Assets $50,037,500

P9-4A: a
Journal
 Date Description/Accounts Dr Cr
Apr.1 Land $4,400,000
Cash $1,100,000
Note payable $3,300,000
May.1 Depreciation expense $93,333
Accumulated depreciation – equipment $93,333
(*) Cash $300,000
Accumulated depreciation – equipment $2,333,333
Loss on disposal equipment $136,667
Equipment $2,800,000
Jun.1 Cash $900,000
Note receivable $2,700,000
Land $1,400,000
Gain on sale of land $2,200,000
Jul.1 Equipment $2,200,000
Cash $2,200,000
Dec.3
1 Accumulated depreciation – equipment $1,000,000
Equipment $1,000,000

(*) Cost of equipment $2,800,000

Less: Accum. Deprec (2,800,000:10)x8+(2,800,000:10):12x4 = 2,333,333
Book value at date of
disposal $466,667

b,
Dec.31 Depreciation expense – buildings $2,435,000
(97,400,000:40)x1
Accumulated depreciation - buildings $2,435,000

Depreciation expense – equipment $14,730,000

(150,000,000 – 2,800,000 – 1,000,000):10
+ (2,200,000: 10) x 0.5
Accumulated depreciation – equipment $14,730,000

Interest Expense $148,500

Interest Payable $148,500

 Interest Receivable $78,750

Interest Revenue $78,750

c,

YOUNGSTOWN COMPANY
Statement of Financial Position
December 31,2017
Land 23,000,000
Equipment 148,400,000
Less: Acc. Deprec - Equipment 65,590,000 82,810,000
Builidings 97,400,000
Less: Acc. Deprec – buildings 64,635,000 32,765,000
Total Plant Assets $138,575,000

CHAP 10: REPORTING AND ANALYZING LIABILITIES

E10-1:
(a)

2017 Jun.1 Cash $15,000

Notes payable $15,000
(b)
$10
2017 Jun.30 Interest expense 0
Interest payable
($15,000 x 8% x 1/12) $100
(c)
Interest payable
Dr Cr

$700
 Bal: $700
(d)

2018 Jan.1 Notes payable $15,000

Interest payable
($15,000 x 8% x
7/12) $700
$15,70
Cash 0

E10-3:
a,
Jun.1 Cash $60,000
Notes payable $60,000
b,
Jun.30 Interest expense $400
Interest payable
($60,000 x 8% x 1/12) $400
c,
Nov.30 Interest expense $2,400
Interest payable
($60,000 x 8% x 6/12) $2,400
$60,00
Dec.31 Notes payable 0
Interest payable $2,400
$62,40
Cash 0
d, Interest expense = $2,400
P10-2A: