In calculating depreciation, both plant asset cost and useful life are based on estimates.
Answer:
The dividends account is a permanent account whose balance is carried forward to the
next accounting period.
Answer:
Using the cash payments journal above, identify each of the posting references
indicated by a letter, as representing:
(1) a posting to a general ledger account.
(2) a posting to a subsidiary ledger account.
(3) that no posting is required.
Answer:
What are the similarities and differences between the terms depreciation, depletion, and
amortization?
Answer:
Prepare the required end-of-period adjusting entries for each independent case listed
below.
Case 1
Sleater-Kinney Company began the year with a $3,000 balance in the Supplies account.
During the year, $8,500 worth of additional supplies were purchased. A physical count
of supplies on hand at the end of the year revealed that $7,400 worth of supplies had
been used during the year. No adjusting entry has been made until year end.
Case 2
Western Company has a calendar year-end accounting period. On July 1, the company
purchased equipment for $30,000. It is estimated that the equipment will depreciate
$300 each month. No adjusting entry has been made until year end.
Case 3
Ranch Realty is in the business of renting several apartment buildings and prepares
monthly financial statements. It has been determined that 3 tenants in $900 per month
apartments and one tenant in the $1,200 per month apartment had not paid their August
rent as of August 31st.
Answer:
On the date of issue, Chudzick Corporation sells $5 million of 5-year bonds at 97. The
entry to record the sale will include the following debits and credits:
Answer:
On January 1, 2015, Dreamy Company issued 30,000 shares of $2 par value common
stock for $150,000. On March 1, 2015, the company purchased 6,000 shares of its
common stock for $7 per share for the treasury. On June 1, 2015, 1,500 of the treasury
shares are sold for $10 per share. On September 1, 2015, 3,000 treasury shares are sold
at $5 per share.
Instructions
Journalize the stock transactions of Dreamy Company in 2015.
Answer:
The lower-of-cost-or-market basis of accounting for inventories should be applied when
the ______________ cost of the goods is lower than its cost.
Answer:
Schilling Corporation purchased a machine on January 1, 2014, at a total cost of
$1,800,000. The machine has an estimated useful life of 10 years or 1,000,000 units of
output and a salvage value of $300,000.
Instructions: Complete the following table by presenting the annual depreciation
expense for the years 2014 and 2015, under the indicated depreciation methods.
Assume actual activity in terms of units of output was: 2014’”60,000 units and
2015’”120,000 units.
Answer: