Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
8-35
PROBLEM 8-30A (cont.)
d. Sales (four years) $160,000
Depreciation (four years) (45,000)
8-36
PROBLEM 8-31A
a.
Flannery Company
General Journal
Date
Account Titles
Debit
Credit
2016
1/1
Silver Mine
1,500,000
Cash
1,500,000
7/1
Timber
1,600,000
Land
100,000
Cash
1,700,000
12/31
Depletion Expense1 (14,000 x $15)
210,000
Silver Mine
210,000
12/31
Depletion Expense2 (500,000 x $1.60)
800,000
Timber
800,000
2017
2/1
Gold Mine
2,700,000
Cash
2,700,000
9/1
Oil Reserves
1,300,000
Cash
1,300,000
12/31
Depletion Expense (20,000 x $15)
300,000
Silver Mine
300,000
12/31
Depletion Expense (300,000 x $1.60)
480,000
Timber
480,000
12/31
Depletion Expense3 (4,000 x $54)
216,000
Gold Mine
216,000
12/31
Depletion Expense4 (50,000 x $5)
250,000
Oil Reserves
250,000
foot.
8-37
3Gold Mine depletion: $2,700,000 50,000 = $54 per ton
8-38
PROBLEM 8-31A (cont.)
b. Natural Resources
Silver Mine (less depletion) $ 990,0001
Timber (less depletion) 320,0002
PROBLEM 8-32A
a.
Horizontal Statements Model
Date
Assets
=
Liab.
+
Equity
Net Income
Cash Flows
1/1/16
+−
NA
NA
NA
− IA
12/31/16
−
NA
−
−
NA
9/30/17
−
NA
−
−
− OA
12/31/17
−
NA
−
−
NA
1/1/18
+−
NA
NA
NA
− IA
12/31/18
−
NA
−
−
NA
6/1/19
−
NA
−
−
− OA
12/31/19
−
NA
−
−
NA
1/1/20
+−
NA
NA
NA
− IA
12/31/20
−
NA
−
−
NA
10/1/21*
−
NA
−
−
NA
10/1/21**
+
NA
+
+
+ IA
8-40
**$69,666 - $9,000 overhaul = $60,666
8-41
PROBLEM 8-32A (cont.)
c.
Computation of Book Value
Year
Cost
−
Acc. Depr.
=
Book Value
2016
$90,000
−
$17,000
=
$73,000
2017
90,000
−
34,000
=
56,000
2018
92,500
−
51,833
=
40,667
2019
92,500
−
69,666
=
22,834
2020
92,500
−
78,611
=
22,889
d. Computation of Depreciation Expense for 2021:
$8,945 x 9/12 = $6,709
Book Value at Date of Sale:
12/31/20 $22,889 (see above)
2021 Depreciation (6,709)
Book Value $16,180
Selling Price $19,000
Less: Book Value (16,180)
Gain on Sale $ 2,820
e.
Account Title
Debit
Credit
Cash
19,000
Accumulated Depreciation
76,320
Equipment
92,500
Gain on Sale
2,820
PROBLEM 8-33A
a. NC = Net Change in Cash
Tower Company
Statements Model for 2018
Assets
=
Stockholders’
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
No.
Cash
+
Book Value of
Truck
=
C. Stock
+
Ret. Ear.
Bal.
20,000
+
13,000
=
9,000
+
24,000
NA
−
NA
=
NA
NA
1/4
(6,000)
+
6,000
=
NA
+
NA
NA
−
NA
=
NA
(6,000) IA
7/6
(250)
+
NA
=
NA
+
(250)
NA
−
250
=
(250)
(250) OA
8/7
(350)
+
NA
=
NA
+
(350)
NA
−
350
=
(350)
(350) OA
12/31
(7,500)
+
NA
=
NA
+
(7,500)
NA
−
7,500
=
(7,500)
(7,500) OA
12/31
NA
+
(8,000)*
=
NA
+
(8,000)
NA
−
8,000
=
(8,000)
NA
Tot.
5,900
+
11,000
=
9,000
+
7,900
NA
−
16,100
=
(16,100)
(14,100) NC
*Computation of Depreciation Expense:
Cost $31,000
2016 Depr. $9,000 ($31,000 - $4,000 ÷ 3)
2017 Depr. 9,000
2018 Overhaul (6,000) (12,000)
Book Value $19,000 − $3,000 salvage = $16,000 new depreciable cost
New Depreciable Cost: 16,000 2 = $8,000
8-43
PROBLEM 8-33A (cont.)
b.
Tower Company
General Journal for 2018
Date
Account Titles
Debit
Credit
1/4/18
Accumulated Depreciation
6,000
Cash
6,000
7/6/18
Maintenance Expense
250
Cash
250
8/7/18
Maintenance Expense
350
Cash
350
12/31/18
Gasoline Expense
7,500
Cash
7,500
12/31/18
Depreciation Expense
8,000
Accumulated Depreciation
8,000
8-44
PROBLEM 8-34A
a. Acquisition Price $1,400,000
Less: FV of Assets Acquired:
Equipment $510,000
8-45
PROBLEM 8-35A
Date
Account Titles
Debit
Credit
Impairment Loss
70,000
Goodwill
70,000
