Reference no: EM131195893

Question 1:

Basket purchase allocation Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $50,400. Crow's cost of moving and installing the machinery totaled $4,800.

Item	Hares NBV on date of sale		List Price same Item new		Appraiser estimate of FMV
Punch press	$30,240		$54,000		$36,000
Lathe	$24,192		$27,000		$18,000
Welder	$6,048		$9,000		$6,000
Total	$60,480		$90,000		$60,000

The following data are available:

Required:

a. Calculate the amount that should be recorded by Crow Co. as the cost of each piece of equipment

First calculate the value of the equipment					Cost
					Move/Install
					Total
Item	Appraiser estimate of FMV		% of Total		Total Allocated		Purcase Price Allocation
Punch press
Lathe
Welder
Total

b. Which of the following alternatives should be used as the depreciable life for Crow Co.'s depreciation calculation? Explain your answer.

Question 2:

Transaction analysis-various accounts Prepare an answer sheet with the fol-lowing column headings.

For each of the following transactions or adjustments, in-dicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (1) or a subtraction (2). Transaction a has been done as an illustration.

Net income is not affected by every transaction.

         Assets                             Liabilities                          Net Income

a.  Recorded S200                    Accumulated                         Depreciation

of depreciation                         Depreciation                         Expense

expense.                                        -200                               -200

b. Sold land that had originally cost $39,000 for $34,200 in cash.

c. Recorded a $204,000 payment for the cost of developing and registering a patent.

d. Recognized periodic amortization for the patent (in part c) using the maximum statutory useful life.

e. Capitalized $9,600 of cash expenditures made to extend the useful life of produc-tion equipment.

f. Expensed $5,400 of cash expenditures incurred for routine maintenance of pro-duction equipment.

g. Sold a used machine for $27,000 in cash. The machine originally cost $90,000 and had been depreciated for the first two years of its five-year useful life using the double-declining-balance method. (Hint: You must compute the balance of the accumulated depreciation account before you can record the sale.)

h. Purchased a business for $960,000 in cash. The fair values of the net assets acquired were as follows: Land, $120,000; Buildings, $600,000; Equipment, $300,000; and Long-Term Debt, $210,000.

In some cases, only one column may be affected because all of the specific accounts affected by the transac-tion are included in that category

Question 3:

Unearned revenues-ticket sales Kirkland Theater sells season tickets for six events at a price of $378. For the 2013 season, 1,200 season tickets were sold.

Required:

a. Use the horizontal model (or write the journal entry) to show the effect of the sale of the season tickets.

b. Where on the balance sheet would the account balance representing funds received for performances not yet presented be classified?

Question 4:

Transaction analysis-various accounts Enter the following column headings Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the appropriate balance sheet category or on net income by entering for each category affected the account name and amount, and in- dicating whether it is an addition (1) or a subtraction (-). Items that affect net income should not also be shown as affecting stockholders' equity. You may also write the journal entries to record each transaction/adjustment

a. Recorded the financing (capital) lease of a truck. The present value of the lease payments is $65,000; the total of the lease payments to be made is $78,000.

b. Recorded the company's payroll for the month. Gross pay was $7,200, net pay was $5,100, and various withholding liability accounts were credited for the difference.

c. Issued $21,000 of bonds payable at a price of 103.

d. Adjusted the estimated liability under a warranty program by reducing previously accrued warranty expense by $4,200.

e. Retired bonds payable with a carrying value of $12,000 by calling them at a redemption value of 101.

f. Accrued estimated health care costs for retirees; $18,000 is expected to be paid within a year, and $155,000 is expected to be paid in more than a year.

Attachment:- Managerial Accounting.xlsx