exercise 20 - ACCOUNTING Exercise 20 Boeing 787 1 ECONOMIC...

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1 ACCOUNTING Exercise 20 Boeing 787
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2 ECONOMIC EVENTS 1. Spend $14,000,000,000 for aircraft design and development. 2. Build 200 aircraft for $40,000,000,000. 3. Sell 160 aircraft to domestic companies, for cash, at $260,000,000 per aircraft. 4. Record $32,000,000,000 Cost of Sales. 5. Sell 20 aircraft to European customers, on credit, at $260,000,000 per aircraft. Invoice the customers in Euros, when the exchange rate is $1.00 = 1.00 Euro. 6. Record $4,000,000,000 Cost of Sales. 7. Declare a $400,000,000 dividend. 8. Pay $2,000,000 for machinery maintenance. 9. Pay $40,000,000 to overhaul equipment. The equipment now runs faster than it did before. 10. Europe customers pay 5,200,000,000 Euros for the aircraft purchases. We convert Euros to dollars when the exchange rate is $1.00 = 1.00 Euro. 11. Pay $4,000,000 to buy back shares of our own company. 12. Pay $6,000,000 to buy stock of another company.
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3 ECONOMIC EVENTS 13. Pay $8,000,000 to buy bonds of another company. 14. Issue Bonds Payable and receive $100,000,000 cash (5 years,10% rate). 15. Receive $40,000,000 advertising invoice. 16. Receive $400,000 dividend from holding the stock of another company. 17. Sell bond investment for $7,600,000. 18. Sell treasury stock for $4,600,000. 19. Pay employees on pay day. Gross salaries are $100,000,000. Federal Withholding…..10,000,000 State Withholding…..3,000,000 FICA…..8% SDI…..1% 20. Accrue payroll taxes. FICA…..8% FUTA…..2% SUTA…..4%
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4 ECONOMIC EVENTS 21. End of year. Accrue $10,000,000 interest on Bonds Payable. 22. End of year. Record depreciation on machinery (5 year lives, Sum of the Years’ Digits method) 23. End of year. Record depreciation on equipment (5 year lives, Double Declining Balance method) 24. End of year. Record depreciation on manufacturing building (40 year life, Straight Line method) 25. End of year. Transfer Net Income / (Loss) to Retained Earnings.
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5 JOURNAL ENTRIES 1. 2. 3. 4. 5.
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6 JOURNAL ENTRIES 6. 7. 8. 9. 10.
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7 JOURNAL ENTRIES 11. 12. 13. 14. 15.
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8 JOURNAL ENTRIES 16. 17. 18. 19. 20.
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9 JOURNAL ENTRIES 21. 22. 23. 24. 25.
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10 Cash Reference Transaction Current Balance Debit Credit Debit Credit 80,000,000,000
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11 Manufacturing Building Reference Transaction Current Balance Debit Credit Debit Credit 2,000,000,000
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12 Machinery Reference Transaction Current Balance Debit Credit Debit Credit 1,020,000,000
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13 Equipment Reference Transaction Current Balance Debit Credit Debit Credit 1,000,000,000
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14 Common Stock Reference Transaction Current Balance Debit Credit Debit Credit 10,000,000,000
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15 Paid in Capital Reference Transaction Current Balance Debit Credit Debit Credit 60,000,000,000
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16 Retained Earnings Reference Transaction Current Balance Debit Credit Debit Credit 14,020,000,000
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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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