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exercise 18 - ACCOUNTING Exercise 18 Dell Computer 1...

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1 ACCOUNTING Exercise 18 Dell Computer
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2 ECONOMIC EVENTS 1. Pay $500,000 for improvements to a building the company is leasing from another company. 2. Spend $40,000,000 manufacturing 200,000 computers. 3. Sell 150,000 computers for $1,200 each to customers on credit. 4. Record $30,000,000 Cost of Sales. 5. Spend $20,000,000 on research and development. 6. Accrue $2,000,000 for estimated warranty costs (two year warranties). 7. Pay $10,000,000 to buy back the company’s stock. 8. Sell the machinery for $5,000,000. 9. Sell the treasury shares for $8,000,000. 10. Record payroll. Gross pay is $100,000,000. Federal Withholding is $10,000,000, State withholding is $5,000,000, FICA rate is 8%, SDI rate is 1%. Employees are paid the net amount. 11. Accrue payroll taxes. FICA rate is 8%, FUTA 2%, SUTA 4%. 12. Record depreciation on equipment (5 year life, SYD). 13. Record depreciation on leasehold improvements (5 year lease term, straight line). 14. Record amortization on the patent (20 year life, straight line). 15. Accrue $1,000,000 for vacations. 16. Transfer Net Income/Loss to Retained Earnings.
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3 JOURNAL ENTRIES 1. 2. 3. 4. 5.
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4 JOURNAL ENTRIES 6. 7. 8. 9. 10.
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5 JOURNAL ENTRIES 11. 12. 13. 14. 15.
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6 JOURNAL ENTRIES 16. 17. 18. 19. 20.
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7 Cash Reference Transaction Current Balance Debit Credit Debit Credit 200,000,000
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8 Land Reference Transaction Current Balance Debit Credit Debit Credit 70,000,000
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9 Equipment Reference Transaction Current Balance Debit Credit Debit Credit 100,000,000
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10 Machinery Reference Transaction Current Balance Debit Credit Debit Credit 20,000,000
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11 Machinery Accum Depre Reference Transaction Current Balance Debit Credit Debit Credit 10,000,000
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12 Patent Reference Transaction Current Balance Debit Credit Debit Credit 1,000,000
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13 Common Stock Reference Transaction Current Balance Debit Credit Debit Credit 100,000,000
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14 Paid in Capital Reference Transaction Current Balance Debit Credit Debit Credit 81,000,000
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15 Retained Earnings Reference Transaction Current Balance Debit Credit Debit Credit 200,000,000
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16 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit
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17 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit
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18 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit
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19 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit
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20 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit
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