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PROBLEM 9-4B
Year
Depreciation
Expense
Accumulated
Depreciation
2013
2014
2015
2016
2017
2018
2019
$45,000(a)
45,000
36,000(b)
36,000
36,000
48,500(c)
48,500
$ 45,000
90,000
126,000
162,000
198,000
246,500
295,000
(a)
$300,000 – $30,000
6 years
= $45,000
(b)
Book value –Salvage value
Remaining useful life
=
$210,000 – $30,000
5 years
= $36,000
(c)
$102,000 – $5,000
2 years
= $48,500
PROBLEM 9-5B
(a) Apr. 1 Land................................................. 1,200,000
May 1 Depreciation Expense .................... 15,000
($450,000 X 1/10 X 4/12)
1 Cash ................................................ 260,000
Cost $450,000
Accum. depreciation—
equipment 195,000
June 1 Cash ................................................ 1,000,000
July 1 Equipment ....................................... 1,500,000
Dec. 31 Depreciation Expense .................... 30,000
31 Accumulated Depreciation—
PROBLEM 9-5B (Continued)
Cost $300,000
(b) Dec. 31 Depreciation Expense ..................... 400,000
31 Depreciation Expense ..................... 3,000,000
($29,250,000* X 1/10) $2,925,000
(c) TORREALBA COMPANY
Partial Balance Sheet
December 31, 2016
Plant Assets*
Land ..................................................... $ 2,860,000
Buildings .............................................. $20,000,000
*See T-accounts which follow.
PROBLEM 9-5B (Continued)
Land
Bal. 2,000,000
Apr. 1 1,200,000
June 1 340,000
Bal. 2,860,000
Buildings
Bal. 20,000,000
Bal. 20,000,000
Accumulated Depreciation—Buildings
Bal. 8,000,000
Dec. 31 adj. 400,000
Bal. 8,400,000
Equipment
Bal. 30,000,000
July 1 1,500,000
May 1 450,000
Dec. 31 300,000
Bal. 30,750,000
Accumulated Depreciation—Equipment
May 1 195,000
Dec. 31 300,000
Bal. 4,000,000
May 1 15,000
Dec. 31 30,000
Dec. 31 adj. 3,000,000
Bal. 6,550,000
PROBLEM 9-6B
(a) Accumulated Depreciation—Equipment .................. 26,000
(b) Cash ............................................................................ 29,000
(c) Cash ............................................................................ 10,000
PROBLEM 9-7B
(a) Jan. 2 Patents .................................................. 36,000
Jan.– Research and Development
June Expense ............................................ 230,000
Sept. 1 Advertising Expense ............................ 125,000
(b) Dec. 31 Amortization Expense .......................... 14,000
31 Amortization Expense .......................... 7,500
(c) Intangible Assets
cost of $300,000 is being amortized over 50 years.
PROBLEM 9-8B
1. Research and Development Expense ...................... 110,000
Patents ....................................................................... 11,000
2. Goodwill ..................................................................... 2,000
Note: Goodwill should not be amortized because it has an indefinite life unlike
Patents.
PROBLEM 9-9B
(a)
Auer Corp.
Marte Corp.
Asset turnover
$1,050,000
$1,000,000
= 1.05 times
$945,000
$1,050,000
= .90 times
turnover ratio.
CHAPTER 9 COMPREHENSIVE PROBLEM SOLUTION
(a) 1. Equipment ............................................................ 22,800
2. Depreciation Expense .......................................... 450
Cash ...................................................................... 3,500
Accumulated Depreciation—Equipment ............ 2,250
3. Accounts Receivable ........................................... 9,000
Cost of Goods Sold .............................................. 6,300
Inventory .......................................................... 6,300
4. Bad Debt Expense ............................................... 3,500
5. Interest Receivable ($10,000 X .08 X 9/12) .......... 600
6. Insurance Expense ($3,600 X 4/6) ....................... 2,400
7. Depreciation Expense .......................................... 4,000
8. Depreciation Expense .......................................... 9,900
9. Depreciation Expense .......................................... 2,800
COMPREHENSIVE PROBLEM (Continued)
10. Amortization Expense ......................................... 900
11. Salaries and Wages Expense ............................. 5,200
12. Unearned Rent Revenue ($6,000 ÷ 3) ................. 2,000
13. Interest Expense ($11,000 + $30,000) X .09 ........ 3,690
