Week 4 - Individual Assignments - David Trejo

Correcting entries are handled in the current and

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(a) Prepare the entry to correct the prior years’ depreciation, if necessary. Correcting entries are handled in the current and prospective periods, not from prior years' de correcting entry is needed. (b) Prepare the entry to record depreciation for 2008. Book value as of 1/1/2008 [$60,000 – ($7,000 X 5)] = $25,000 Book value as of 1/1/2008 [$60,000 – ($7,000 X 5)] = $25,000 Revised salvage value, $4,500 Depreciation Expense (Machinery) $4,100 Accumulated Depreciation (Machinery) $4,100 ($25,000 – $4,500) ÷ 5 = $4,100
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Co. in d of that otal estimated ine depreciation. epreciation…no
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E12-6 (Recording and Amortization of Intangibles) Rolanda Marshall Company, organized in 2006, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2007. 1/2/07 Purchased patent (8-year life) $ 350,000 4/1/07 Purchased goodwill (indefinite life) 360,000 7/1/07 Purchased franchise with 10-year life; expiration date 7/1/17 450,000 8/1/07 Payment of copyright (5-year life) 156,000 9/1/07 Research and development costs 215,000 Total: 1531000 Instructions Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2007, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.) 2007 Amortization * Annual amortization of patent: $34,750 $43,750 ** Annual amortization of Franchise: $45,000 $22,500 *** Annual amortization of copyright: $31,200 $13,000 Debit Credit
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