Reference no: EM13486084

1.Mehta Company traded a used welding machine (cost $12,510, accumulated depreciation $4,170) for office equipment with an estimated fair value of $6,950. Mehta also paid $4,170 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

2.Fernandez Corporation purchased a truck at the beginning of 2012 for $52,080. The truck is estimated to have a salvage value of $2,480 and a useful life of 198,400 miles. It was driven 28,520 miles in 2012 and 38,440 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.)

2012: $

2013: $

3.Lockhard Company purchased machinery on January 1, 2012, for $75,000. The machinery is estimated to have a salvage value of $7,500 after a useful life of 8 years.

(a) Compute 2012 depreciation expense using the double-declining balance method.

$

(b) Compute 2012 depreciation expense using the double-declining balance method assuming the machinery was purchased on October 1, 2012.(Round answer to 0 decimal places, i.e. 2,250.)

$

4.Jurassic Company owns machinery that cost $1,296,000 and has accumulated depreciation of $518,400. The expected future net cash flows from the use of the asset are expected to be $720,000. The fair value of the equipment is $576,000. Prepare the journal entry, if any, to record the impairment loss.

5.Everly Corporation acquires a coal mine at a cost of $523,600. Intangible development costs total $130,900. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $104,720), after which it can be sold for $209,440. Everly estimates that 5,236 tons of coal can be extracted. If 916 tons are extracted the first year, prepare the journal entry to record depletion.

6.Francis Corporation purchased an asset at a cost of $62,000 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $6,200. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012-2017. (Round answers to 0 decimal places.)

2012: $

2013: $

2014: $

2015: $

2016: $

2017: $

7.Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $56,460. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion's journal entries to record the purchase of the patent and 2012 amortization.

8.Karen Austin Corporation has capitalized software costs of $736,200, and sales of this product the first year totaled $398,400. Karen Austin anticipates earning $929,600 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year.

(a) Compute the amount of software cost amortization for the first year using the percent of revenue approach.

$

(b) Compute the amount of software cost amortization for the first year using the straight-line approach.

$

9.Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $72,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,470. On July 3, Roley returned damaged goods and received credit of $7,200. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. (For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)

10.Takemoto Corporation borrowed $106,800 on November 1, 2012, by signing a $109,203, 3-month, zero-interest-bearing note. Prepare Takemoto's November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, list amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g. 11,150.)

11.Whiteside Corporation issues $653,000 of 9% bonds, due in 15 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. (Use the present value tables in the text. Round your answer to zero decimal places, e.g. 2,510.)

$

12.Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $38,690 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $21,360 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $188,981. Prepare Lost Ark's January 1, 2012, journal entries.

13.On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $25,050 and immediately leased it back. The truck was carried on Irwin's books at $19,550. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $6,778 at the end of each year. The appropriate rate of interest is 11%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin's 2012 journal entries.