On April 1, 2016, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $57,200, has an ten-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment. On January 4, 2018, $14,750 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,900 represented ordinary repairs and annual maintenance and $11,850 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 12 years.

1. Prepare journal entries for the depreciation for 2016 and 2017.
2. Prepare journal entries for the 2018 expenditure.
3. Prepare journal entries for the depreciation for 2018.

Jonathan operates a business as a sole proprietor. His business is a lawn service and landscaping business. In July 2018, Jonathan purchased two new lawn mowers at a cost of $6,000 each. He also purchased a new warehouse to store all of the equipment in. The warehouse cost $200,000 and he purchased it in August 2018

In 2020, Jonathan had the following items of income and deduction:

$70,000 of income form lawn service

$20,000 in expenses related to his business

Sale of the warehouse for $210,000

Sale of one mower (purchased in 2018) for $4,000

Please calculate Jonathan's depreciation deductions for 2020 (if any), ignoring bonus depreciation and Section 179. Also, please calculate Jonathan's taxable income and any special issues relating to how the income will be taxed.

Hanson Manufacturing Company purchased a machine for $1,060,000 at the beginning of 2018. The machine has an estimated useful life of five years and an estimated residual value of $270,000. The machine, which is expected to last 20,000 hours, was operated 3,000 hours in 2018 and 2,000 hours in 2019.

REQUIRED:

1.      Compute the annual depreciation for 2018 and 2019 under the following depreciation methods. You must show all of your work to receive any credit.

         (a) Straight-line:

         (b) Units of production:

         (c) Double-declining balance:

No. 5 continued:

2.      Assume the machine is sold at the beginning of 2020 for $760,000. Prepare the journal entry to record the disposal of the machine under each of the three methods.

         (a) Straight-line:

         (b) Units of production:

         (c) Double-declining balance:

Toyota Camry, Honda Accord and Ford F-150 are the top 3 best-selling passenger cars in the U.S for the last 5 years. Data for 2018 is shown in the table below. Your interest is to to determine whether the shares in the passenger car market have changed in 2018. Use an alpha of 0.05 on your test. Market Share Observed in 2018 Toyota Camry 0.40 90 Honda Accord 0.35 70 Ford F-150 0.25 40 total 100% 200 What is the expected value for each category What is the value of the test statistic you calculated for this problem? What is the value of degrees of freedom? What is the critical value for the given alpha What is your decision after performing the test What is your conclusion after performing the test? Be specific and relate to the problem.

The following information pertains to the payrolls of Warrs Company for November 2018:

Employees       Wage earned               Wage earned               Federal Income           State/local

                        By 10/31/2018 in November 2018     Tax                              Income Taxes

Jane                 $105,000                     $12,000                       $1,500                         $650

Tom                     60,000                      7,000 500 250

Bill                        6,000 1,200                          0                                   0

Actual state unemployment tax rate is 4%, while the federal unemployment tax rate is 1%. The taxable income limit for social security tax is $110,000/person, year, while the taxable income limit of SUTA and FUTA is $7,000/ person, year.

- Prepare the necessary journal entries for November payrolls of Warrs Company if salaries and wages are paid in cash after withholding all payroll taxes and dues.

On April 1, 2016, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $57,200, has an ten-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment. On January 4, 2018, $14,750 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,900 represented ordinary repairs and annual maintenance and $11,850 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 12 years.

Required: 1. Prepare journal entries for the depreciation for 2016 and 2017.

2. Prepare journal entries for the 2018 expenditure.

3. Prepare journal entries for the depreciation for 2018.

In 2018, the internal auditors of KJI Manufacturing discovered the following material errors made in prior years:
  

1. Equipment was purchased on June 30, 2016, for $130,000. The purchase was incorrectly recorded as a debit to repair and maintenance expense. The equipment has a useful life of five years and no residual value.
2. On March 31, 2017, $62,000 was paid to a contractor to landscape the area around a manufacturing plant including the installation of a sprinkler system. The expenditure was debited to the Land account. The landscaping is expected to have a 20-year useful life and no residual value.

KJI uses the straight-line method of depreciation for all depreciable assets.

Required:
1. Prepare the journal entries at December 31, 2018, to correct the errors (ignore income taxes).
2. Prepare the journal entries to record 2018 depreciation for any assets recorded in requirement 1.

Lancaster Services, Inc. leased equipment from Phillips Corporation. Phillips completed construction of the machine on January 1, 2018. The lease agreement for the $8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Phillip's implicit interest rate was 10%.

Required:
1. Prepare the journal entry for Lancaster Services at the beginning of the lease on January 1, 2018.
2. Prepare an amortization schedule for the four-year term of the lease. Round your answers to the nearest whole dollar amounts.
3. Prepare the appropriate journal entries related to the lease on December 31, 2018.
4. Prepare the appropriate journal entries related to the lease on December 31, 2020.

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

Required:

1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

Roth Corporation used the equity method to report the following transactions for the years 2018 and 2019:

2018 Feb. 2 Purchased 40% of the voting common shares of Dunn Enterprises Inc. for $500,000.
This is a long-term investment giving Roth Corporation significant influence over the operations of Dunn Enterprises Inc.

Oct. 15 Received $20,000 cash dividends on Dunn Enterprises Inc. common shares.

Dec. 31 Dunn Enterprises Inc. reported total income of $190,000 for the year ended December 31, 2018.

2019 Jun. 30 Dunn Enterprises Inc. reported total income of $40,000 for the six months ended June 30, 2019.

Jun 30 Sold one-half of the Dunn Enterprises Inc. shares for $275,000.

Prepare journal entries to record the above transactions.