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ACC557 Week 6

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ACC557 Week 6 Chapter 9 E9-3 E9-6 E9-9 E9-12 P9-5A P9-6A
ACC557 Week 6 Chapter 10 E10-7 E10-8 E10-10 E10-13 P10-4A P10-5A

E9-3 The ledger of Hixson Company at the end of the current year shows Accounts
Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.

and so on ...

E9-6 On December 31, 2008, Jarnigan Co. estimated that 2% of its net sales of $400,000 will become uncollectible. The company recorded this amount as an addition to Allowance for Doubtful Accounts. On May 11, 2009, Jarnigan Co. determined that Terry Frye’s account was uncollectible and wrote off $1,100. On June 12, 2009, Frye paid the amount previously written off.

Prepare the journal entries on December 31, 2008, May 11, 2009, and June 12, 2009.

E9-9 Topeka Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred.
Jan. 15 Made Topeka credit card sales totaling $18,000. (There were no balances prior to January 15.)
20 Made Visa credit card sales (service charge fee 2%) totaling $4,300.
Feb. 10 Collected $10,000 on Topeka credit card sales.
15 Added finance charges of 1% to Topeka credit card balance.

(a) Journalize the transactions for Topeka Stores.

E9-12 Singletary Company had the following select transactions.
Apr. 1, 2008 Accepted Wilson Company’s 1-year, 12% note in settlement of a $20,000
account receivable.
July 1, 2008 Loaned $25,000 cash to Richard Dent on a 9-month, 10% note.
Dec. 31, 2008 Accrued interest on all notes receivable.
Apr. 1, 2009 Received principal plus interest on the Wilson note.
Apr. 1, 2009 Richard Dent dishonored its note; Singletary expects it will eventually collect.

Prepare journal entries to record the transactions. Singletary prepares adjusting entries once a year on December 31

P9-5A At December 31, 2008, the trial balance of Worcester Company contained the following amounts before adjustment.
Debits Credits
Accounts Receivable $385,000
Allowance for Doubtful Accounts $ 2,000
Sales 950,000

and so on ...

P9-6A Mendosa Company closes its books monthly. On September 30, selected ledger account
balances are:
Notes Receivable $33,000
Interest Receivable $ 170
Notes Receivable include the following.
Date Maker Face Term Interest
Aug. 16 Chang Inc. $ 8,000 60 days 8%
Aug. 25 Hughey Co. 9,000 60 days 10%
Sept. 30 Skinner Corp. 16,000 6 months 9%

and so on...

E10-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2008.The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years.Actual miles driven were 15,000 in 2008 and 12,000 in 2009.

(a) Compute depreciation expense for 2008 and 2009 using (1) the straight-line method, (2) the
units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2008 depreciation.
(2) Show how the truck would be reported in the December 31, 2008, balance sheet.

E10-8 Jerry Grant, the new controller of Blackburn Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2008. His findings are as follows.

Useful Life
Accumulated in Years Salvage Value
Type of Date Depreciation
Asset Acquired Cost 1/1/08 Old Proposed Old Proposed
Building 1/1/02 $800,000 $114,000 40 50 $40,000 $37,000
Warehouse 1/1/03 100,000 19,000 25 20 5,000 3,600

and so on ...

E10-10 Beka Company owns equipment that cost $50,000 when purchased on January 1, 2005.
It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years.

and so on ...

E10-13 Herzogg Company, organized in 2008, has the following transactions related to intangible assets.
1/2/08 Purchased patent (7-year life) $560,000
4/1/08 Goodwill purchased (indefinite life) 360,000
7/1/08 10-year franchise; expiration date 7/1/2018 440,000
9/1/08 Research and development costs 185,000
and so on...

P10-4A At the beginning of 2006, Lehman Company acquired equipment costing $90,000. It
was estimated that this equipment would have a useful life of 6 years and a residual value of $9,000 at that time.The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year.
During 2008 (the third year of the equipment’s life), the company’s engineers reconsidered their expectations, and estimated that the equipment’s useful life would probably be 7 years (in total) instead of 6 years. The estimated residual value was not changed at that time. However, during 2011 the estimated residual value was reduced to $5,000.

and so on ...

P10-5A At December 31, 2008, 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

and so on ...

• Chapter 9: Exercises 3, 6, 9(a) 12; Problems 5(a-e) and 6
• Chapter 10: Exercises 7, 8, 10, 13; Problems 4 and 5

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