Consider each of the transactions below independently. All of the expenditures were made in cash.1. During 2020, PC Software Inc. developed a new personal computer database management software package. Totalexpenditures on the project were $800,000, of which 30% occurred after the technological feasibility of the product had beenestablished.2. Xon Corporation paid $35,000 in 2020 for continuing, frequent, and low-cost repairs to an existing building.3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $5,000 down and signed a noninterest-bearing noterequiring the payment of $30,000 in nine months. The cash price for this equipment was $34,000.Required: Prepare all necessary journal entries to record each of the above transactions.Note: You may create a table as follows to organize your journal entries.DateAccount titlesDebitCreditCash10,00010,000Sales Revenue

Journal entry: A journal entry is used to record day-to-day transactions of the business by debiting…

Answered: 1. During 2020, PC Software Inc.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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University Car Wash built a deluxe car wash across the street from campus. The new machines cost $228,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours, actual use per year as follows: 1 year 3,000 hours; 2 years 1,700 hours; 3 years, 1,800 hours, 4 years 2,200 hours 5 years 2,000 hours 6 years 1,300 hours. Prepare depreciation schedule for 6 years using the activity based method
Consider each of the transactions below independently. All of the expenditures were made in cash. 1. During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditures on the project were $300,000, of which 30% occurred before the technological feasibility of the product had been established. 2. Xon Corporation paid $50,000 to complete overhaul of the plumbing system (old costs unknown). 3. The Johnson Company disposed of an old machine with an original cost of $8,000 and a book value of $4,000 and received $3,000. Required: Prepare journal entries to record each of the above transactions. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Format Table Paragraph v в I U A 12pt v
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On January 2, 2021, Twilight Hospital purchased a $92,000 special radiology scanner from Blossom Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $104,000. Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2021 from Blossom Inc. was a mistake. He points out that Dyno has a scanner that will save Twilight Hospital $24,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $109,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Twilight Hospital for $43,000. (a) If Twilight Hospital sells its old…
Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the Company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight line to zero over 5 years. There is no salvage value at the end of 5 years. Labour cost will be $300,000 per year and overheads $250,000per year. The Company will need to invest in net working capital of $350,000. It plans to issue $1 million worth of bonds for 5 years at a coupon rate of 6% and will price the bonds at par. The Company has an existing bank loan of $9 million. The cost of debt from the bank loan is the same as the bonds. The common stock of the Company is selling for $10 per share and it has 2 million shares outstanding. Expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum into the foreseeable future. The tax rate is 20%.(a) Determine the…
Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $51,300. The equipment has an estimated residual value of $3,300 The equipment is expected to process 267,000 payments over its three- year useful life. Per year, expected payment transactions are 64,080, year 1, 146,850, year 2, and 56,070, year 3. TIP: You cannot depreciation past residual/salvage value in the last year of depreciation. Required: Complete a depreciation schedule for each of the alternative methods. 1. Straight-line. 2. Units-of-production. 3. Double-declining-balance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete a depreciation schedule for Straight-line method. (Do not round intermediate calculations.) Income Statement Year At acquisition 1 2 3 Depreciation Expense $ Cost 51,300 51,300 Balance Sheet wwwwww 51,300 Accumulated Depreciation Required 1 Book Value Required 2 >
OnJanuary 3,2020,GagneInc. paid $320,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of$2,500,$6,400sales tax, and $21,100 for special installation. Management estimates that the computer will remain in service for five years and have a residual value of $20,000.The computer will process 50,000 documents the first year, decreasing annually by 5,000 during each of the next four years (that is 45,000 documents in 2021,40,000 documents is 2022, and so on). In trying to decide which depreciation method to use, the company president has requested a depreciation schedule for each of three depreciation methods (straight-line, units-of-production, and double-diminishing-balance). 1.Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. First, select the labels for the formula and then compute the rate. (Round the rate to two decimal places.) 2. Complete the…

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