Presented below is information related to equipment owned by Bonita Company at December 31, 2020.
| Cost | $9,810,000 | |
| Accumulated depreciation to date | 1,090,000 | |
| Expected future net cash flows | 7,630,000 | |
| Fair value | 5,232,000 |
Bonita intends to dispose of the equipment in the coming year. It
is expected that the cost of disposal will be $21,800. As of
December 31, 2020, the equipment has a remaining useful life of 4
years.
Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,777,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,800. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
In: Accounting
Presented below is information related to equipment owned by Bonita Company at December 31, 2020. Cost $9,810,000 Accumulated depreciation to date 1,090,000 Expected future net cash flows 7,630,000 Fair value 5,232,000 Bonita intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $21,800. As of December 31, 2020, the equipment has a remaining useful life of 4 years. Partially correct answer iconYour answer is partially correct. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the transaction on December 31, 2017 Loss on Impairment enter a debit amount 1090000 enter a credit amount enter an account title to record the transaction on December 31, 2017 Accumulated Depreciation-Equipment enter a debit amount enter a credit amount 1090000 eTextbook and Media List of Accounts Correct answer iconYour answer is correct. Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title No Entry enter a debit amount 0 enter a credit amount enter an account title No Entry enter a debit amount enter a credit amount 0 eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. The asset was not sold by December 31, 2021. The fair value of the equipment on that date is $5,777,000. Prepare the journal entry (if any) necessary to record this increase in fair value. It is expected that the cost of disposal is still $21,800. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
In: Accounting
Bumblebee Company estimates that 402,600 direct labor hours will
be worked during the coming year, 2020, in the Packaging
Department. On this basis, the following budgeted manufacturing
overhead cost data are computed for the year.
|
Fixed Overhead Costs |
Variable Overhead Costs |
|||||
|---|---|---|---|---|---|---|
| Supervision |
$89,280 |
Indirect labor |
$169,092 |
|||
| Depreciation |
73,440 |
Indirect materials |
80,520 |
|||
| Insurance |
26,040 |
Repairs |
40,260 |
|||
| Rent |
21,360 |
Utilities |
60,390 |
|||
| Property taxes |
22,440 |
Lubricants |
40,260 |
|||
|
$232,560 |
$390,522 |
|||||
It is estimated that direct labor hours worked each month will
range from 22,800 to 32,100 hours.
During October, 22,800 direct labor hours were worked and the
following overhead costs were incurred.
Fixed overhead costs: Supervision $7,440, Depreciation $6,120,
Insurance $2,125, Rent $1,780, and Property taxes $1,870.
Variable overhead costs: Indirect labor $10,566, Indirect
materials, $4,260, Repairs $2,240, Utilities $3,740, and Lubricants
$2,640.
Prepare a flexible budget report for October.
In: Accounting
On January 1, 2020, Indigo Company purchased 12% bonds having a maturity value of $310,000, for $333,502.59. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Indigo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
|||||
|
1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
In: Accounting
Recording Goodwill upon Acquisition
On January 1, 2020, the balance sheet of Naperville Company (a sole proprietorship) was as follows.
| Assets | Liabilities | |||
| Accounts receivable (net of allowance) | $120,000 | Current | $76,000 | |
| Inventory | 180,000 | Noncurrent | 160,000 | $236,000 |
| Plant and equipment (net of depreciation) | 400,000 | Equity | ||
| Land | 60,000 | Owners’ equity | 524,000 | |
| Total | $760,000 | Total liabilities and owners’ equity | $760,000 |
On January 1, 2020, Chicago Corporation purchased all of the assets and assumed all of the liabilities listed on the above balance sheet for $580,000 cash. The assets, on date of purchase, were valued by Chicago Corporation as follows: accounts receivable (net), $100,000; inventory, $170,000; plant and equipment (net), $400,000; and land, $90,000. In addition, Chicago Corporation estimated purchased intangible assets of $4,000 for customer list and $16,000 for trade names (both previously unrecorded). The liabilities were valued at their carrying amounts.
Required
a. Compute the amount of goodwill included in the purchase price paid by Chicago Corporation.
$Answer
b. Provide the entry that Chicago Corporation should make to record the purchase of Naperville Company.
| Account Name | Dr. | Cr. |
|---|---|---|
| Accounts Receivable (net) | Answer | Answer |
| Inventory | Answer | Answer |
| Plant and Equipment (net) | Answer | Answer |
| Land | Answer | Answer |
| Intangible Asset—Customer List | Answer | Answer |
| Intangible Asset—Trade names | Answer | Answer |
| Goodwill | Answer | Answer |
| Current Liabilities | Answer | Answer |
| Noncurrent Liabilities | Answer | Answer |
| Cash | Answer | Answer |
c. What is the minimum amount of goodwill that Chicago Corporation can amortize at the end of 2020?
In: Accounting
The stockholders’ equity accounts of Flint Company have the following balances on December 31, 2020. Common stock, $10 par, 292,000 shares issued and outstanding $2,920,000 Paid-in capital in excess of par—common stock 1,320,000 Retained earnings 5,080,000 Shares of Flint Company stock are currently selling on the Midwest Stock Exchange at $33. Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered.
| (a) | A stock dividend of 6% is (1) declared and (2) issued. | |
|---|---|---|
| (b) | A stock dividend of 100% is (1) declared and (2) issued. | |
| (c) | A 2-for-1 stock split is (1) declared and (2) issued. |
In: Accounting
Sheffield Leasing Company agrees to lease equipment to Tamarisk Corporation on January 1, 2020. The following information relates to the lease agreement.
| 1. | The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. | |
| 2. | The cost of the machinery is $483,000, and the fair value of the asset on January 1, 2020, is $757,000. | |
| 3. | At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $55,000. Tamarisk estimates that the expected residual value at the end of the lease term will be 55,000. Tamarisk amortizes all of its leased equipment on a straight-line basis. | |
| 4. | The lease agreement requires equal annual rental payments, beginning on January 1, 2020. | |
| 5. | The collectibility of the lease payments is probable. | |
| 6. | Sheffield desires a 10% rate of return on its investments. Tamarisk’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown. |
(Assume the accounting period ends on December 31.)
Click here to view factor tables.
Discuss the nature of this lease for both the lessee and the
lessor.
This is a _________for Tamarisk.
This is a _________ for Sheffield.
eTextbook and Media
List of Accounts
Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)
| Annual rental payment |
$ |
eTextbook and Media
List of Accounts
Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)
| Present value of minimum lease payments |
$ |
eTextbook and Media
List of Accounts
Prepare the journal entries Tamarisk would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record the lease.) |
|||
|
(To record lease payment.) |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record amortization.) |
|||
|
(To record interest.) |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
1/1/2012/31/201/1/2112/31/21 |
|||
|
(To record amortization.) |
|||
|
(To record interest.) |
In: Accounting
The stockholders’ equity accounts of Bridgeport Company have the
following balances on December 31, 2020.
| Common stock, $10 par, 298,000 shares issued and outstanding | $2,980,000 | |
| Paid-in capital in excess of par—common stock | 1,280,000 | |
| Retained earnings | 5,840,000 |
Shares of Bridgeport Company stock are currently selling on the
Midwest Stock Exchange at $35.
Prepare the appropriate journal entries for each of the following
cases. (Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
| (a) | A stock dividend of 8% is (1) declared and (2) issued. | |
|---|---|---|
| (b) | A stock dividend of 100% is (1) declared and (2) issued. | |
| (c) | A 2-for-1 stock split is (1) declared and (2) issued. |
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(a) (1) |
enter an account title for case A to record the declaration of stock dividends |
enter a debit amount |
enter a credit amount |
|
enter an account title for case A to record the declaration of stock dividends |
enter a debit amount |
enter a credit amount |
|
|
enter an account title for case A to record the declaration of stock dividends |
enter a debit amount |
enter a credit amount |
|
|
(a) (2) |
enter an account title for case A to record the issuance of stock dividends |
enter a debit amount |
enter a credit amount |
|
enter an account title for case A to record the issuance of stock dividends |
enter a debit amount |
enter a credit amount |
|
|
(b) (1) |
enter an account title for case B to record the declaration of stock dividends |
enter a debit amount |
enter a credit amount |
|
enter an account title for case B to record the declaration of stock dividends |
enter a debit amount |
enter a credit amount |
|
|
(b) (2) |
enter an account title for case B to record the issuance of stock dividends |
enter a debit amount |
enter a credit amount |
|
enter an account title for case B to record the issuance of stock dividends |
enter a debit amount |
enter a credit amount |
|
|
(c) (1) |
enter an account title for case C to record the declaration of the stock split |
enter a debit amount |
enter a credit amount |
|
enter an account title for case C to record the declaration of the stock split |
enter a debit amount |
enter a credit amount |
|
|
(c) (2) |
enter an account title for case C to record the issuance of the stock split |
enter a debit amount |
enter a credit amount |
|
enter an account title for case C to record the issuance of the stock split |
enter a debit amount |
enter a credit amount |
In: Accounting
On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for $303,589.66. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sarasota Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
(Enter answers to 2 decimal places, e.g.
2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
Prepare a bond amortization schedule. (Round answers
to 2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
|||||
|
1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/25 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2020. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2021. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
In: Accounting
On January 1, 2020, Sheffield Company purchased 11% bonds,
having a maturity value of $289,000 for $311,481.74. The bonds
provide the bondholders with a 9% yield. They are dated January 1,
2020, and mature January 1, 2025, with interest received on January
1 of each year. Sheffield Company uses the effective-interest
method to allocate unamortized discount or premium. The bonds are
classified as available-for-sale category. The fair value of the
bonds at December 31 of each year-end is as follows.
|
2020 |
$309,400 |
2023 |
$299,100 | |||
|---|---|---|---|---|---|---|
|
2021 |
$297,900 |
2024 |
$289,000 | |||
|
2022 |
$296,900 |
| (a) | Prepare the journal entry at the date of the bond purchase. | |
|---|---|---|
| (b) | Prepare the journal entries to record the interest revenue and recognition of fair value for 2020. | |
| (c) | Prepare the journal entry to record the recognition of fair value for 2021. |
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
(a) |
choose a transaction date
Jan. 1, 2020Dec. 31, 2020Dec. 31, 2021 |
enter an account title to record transaction A | enter a debit amount | enter a credit amount |
| enter an account title to record transaction A | enter a debit amount | enter a credit amount | ||
|
(b) |
choose a transaction date
Jan. 1, 2020Dec. 31, 2020Dec. 31, 2021 |
enter an account title to record interest received | enter a debit amount | enter a credit amount |
| enter an account title to record interest received | enter a debit amount | enter a credit amount | ||
| enter an account title to record interest received | enter a debit amount | enter a credit amount | ||
|
(To record interest received) |
||||
| enter an account title to record fair value adjustment | enter a debit amount | enter a credit amount | ||
| enter an account title to record fair value adjustment | enter a debit amount | enter a credit amount | ||
|
(To record fair value adjustment) |
||||
|
(c) |
choose a transaction date
Jan. 1, 2020Dec. 31, 2020Dec. 31, 2021 |
enter an account title to record transaction C | enter a debit amount | enter a credit amount |
| enter an account title to record transaction C | enter a debit amount | enter a credit amount |
In: Accounting