Unformatted text preview: Introductory Accounting National Taiwan University 財金系 Spring, 2011 Quiz 一、(15%) On March 1, Jordan Company borrows $120,000 from Ottawa State Bank by signing a 6‐month, 8%, interest‐bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Jordan Company. (a) Prepare the entry on March 1 when the note was issued. (b) Prepare any adjusting entries necessary on June 30 in order to prepare the semi‐annual financial statements. Assume no other interest accrual entries have been made. (c) Prepare the adjusting entry at August 31 to accrue interest. (d) Prepare the entry to record payment of the note at maturity. 二、(20%) Colaw Company exchanges equipment with Eaton Company and Mantle Company exchanges equipment with Fiero Company. The following information pertains to the exchanges: Equipment (cost) Accumulated depreciation Fair value of the equipment Cash paid Colaw Company €114,000 50,000 75,000 45,000 Mantle Company €96,000 45,000 42,000 ‐0‐ Instructions Prepare the journal entries to record the exchanges on the books of Colaw Company and Mantle Company. The transaction has commercial substance 1 三、(25%) At December 31, 2010, Jimenez Company reported the following as plant assets. Land $4,000,000 Buildings $28,500,000 Less: Accumulated depreciation—buildings 12,100,000 16,400,000 Equipment 48,000,000 Less: Accumulated depreciation—equipment 5,000,000 43,000,000 Total plant assets $63,400,000 During 2011, the following selected cash transactions occurred. April 1 Purchased land for $2,130,000. May 1 Sold equipment that cost $780,000 when purchased on January 1, 2007.The equipment was sold for $450,000. June 1 Sold land purchased on June 1, 2001 for $1,500,000.The land cost $400,000. July 1 Purchased equipment for $2,000,000. Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2001. No salvage value was received. Instructions (a) Journalize the above transactions. The company uses straight‐line depreciation for buildings and equipment. The buildings are estimated to have a 50‐year life and no salvage value. The equipment is estimated to have a 10‐year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (b) Record adjusting entries for depreciation for 2011. 四、(15%) In recent years, Pablo Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method. Information concerning the machines is summarized below. Salvage Useful Life Depreciation Machine Acquired Cost Value in Years Method 1 1/1/09 $105,000 $ 5,000 10 Straight‐line 2 1/1/09 150,000 10,000 8 Declining‐balance 3 11/1/11 100,000 15,000 6 Units‐of‐activity For the declining‐balance method, the company uses the double‐declining rate. For the units‐of‐activity method, total machine hours are expected to be 25,000. Actual hours of use in the first 3 years were: 2011, 2,000; 2012, 4,500; and 2013, 5,500. 2 Instructions (a) Compute the amount of accumulated depreciation on each machine at December 31, 2011. (b) If machine 2 had been purchased on May 1 instead of January 1, what would be the depreciation expense for this machine in (1) 2009 and (2) 2010? 五、(25%) The intangible assets section of Time Company at December 31, 2010, is presented below. Patent ($100,000 cost less $10,000 amortization) $ 90,000 Copyright ($60,000 cost less $24,000 amortization) 36,000 Total $126,600 The patent was acquired in January 2010 and has a useful life of 10 years. The copyright was acquired in January 2007 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2011. Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company. Jan.–June Developed a new product, incurring $230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life. Sept. 1 Paid $125,000 to an Xgames star to appear in commercials advertising the company’s products. The commercials will air in September and October. Oct. 1 Acquired a copyright for $200,000.The copyright has a useful life of 50 years. Instructions (a) Prepare journal entries to record the transactions above. (b) Prepare journal entries to record the 2011 amortization expense for intangible assets. 3 ...
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- Spring '11
- Accounting, useful life, National Taiwan University, Colaw Company, Accounting National Taiwan University 財金系 Spring, Company exchanges equipment