As the recently appointed auditor for Cheyenne Corporation, you have been asked to examine selected accounts before the 6-monthfinancial statements of June 30, 2020, are prepared. The controller for Cheyenne Corporation mentions that only one account is keptfor intangible assets. The account is shown below.Jan. 4Jan. 5Jan. 31Feb. 11March 31April 30June 30Intangible AssetsResearch and development costsLegal costs to obtain patentPayment of 7 months' rent on propertyleased by CheyennePremium on common stockUnamortized bond discount on bondsdue March 31, 2040Promotional expenses related tostart-up of businessOperating losses for first 6 monthsDebit934,00072,96086,80093,600228,800259,000Credit234,000Balance934,0001,006,9601,093,760859,760953,3601,182,1601,441,160Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles areautomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter o for the amounts.)

Journal Entry is the primary step in recording the transactions in the books of accounts.The…

Answered: As the recently appointed auditor for…

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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On March 31, 2021, management of Quality Appliances committed to a plan to sell equipment. The equipment was available for immediate sale, and an active plan to locate a buyer was initiated. The equipment had been purchased on January 1, 2019, for $660,000. The equipment had an estimated six-year service life and residual value of $120,000. The equipment was being depreciated using the straight-line method. Quality’s fiscal year ends on December 31.Required:1. Calculate the equipment’s book value as of March 31, 2021 (Hint: Depreciation for 2021 would include up to March 31).2. By December 31, 2021, the equipment has not been sold, but management expects that it will be sold in 2022 for $430,000. For what amount is the equipment reported in the December 31, 2021, balance sheet?
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Lindy Weink, the new controller of Blossom Company, has reviewed the expected useful lives and residual values of selected depreciable assets at December 31, 2024. (Depreciation for 2024 has not been recorded yet.) Her findings are as follows: Type of Asset Building Equipment (a) Date Acquired Jan, 1, 2009 Jan. 1, 2022 Building Equipment Cost $800,300 D 125,270 $ $ After discussion, management agrees to accept Lindy's proposed changes. All assets are depreciated by the straight-line method. Blossom Company has a December 31 year end. Total Useful Life in Years Current Proposed 20 5 per year 30 For each asset, calculate the annual depreciation expense using the original estimated useful life and residual value. Annual depreciation expense per year 4 Residual Value Current $39,600 4,650 Proposed $60,110 4,000 11
Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] On April 1, Cyclone Company purchases a trencher for $288,000. The machine is expected to last five years and have a salvage value of $44,000. Exercise 8-11 (Algo) Straight-line, partial-year depreciation LO C2 Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line method. Choose Numerator: Year First year Second year Annual Depreciation X Choose Denominator: Fraction of Year || = = = = Annual Depreciation Annual depreciation Depreciation Expense
On July 1, 2020, Bridgeport Corporation purchased Johnson Company by paying $189,700 cash and issuing a $64,500 note payable to Steve Johnson. At July 1, 2020, the balance sheet of Johnson Company was as follows. Cash $38,100 Accounts payable $160,000 Accounts Receivable 67,500 Stockholders' equity 165,800 Inventory 75,800 $325,800 Land 29,400 Buildings (net) 55,200 Equipment (net) 52,200 Copyrights 7,600 $325,800 The recorded amounts all approximate current fair values except for land (worth $45,400), inventory (worth $94,900), and copyrights (worth $11,300).
Assume you are the Chief Accounting Officer for Mississippi Cookie Company and you are currently undergoing 2022 year-end audit for the company. Assume that the books have been closed for 2022. At the beginning of 2020, the company purchased a new oven for $10,000 with a salvage value of $1,000 and a useful life of 10 years. This purchase was correctly recorded, however, the company has failed to record depreciation for each of the past three years. Record the required journal entry (if any) to correct this error.
How much accretion expense will the company record in its income statement for the 2021 fiscal year related to this transaction? Determine the specific Codification citation for each of the following, based on the format indicated, a. the calculation of accretion expense and b. the classification of accretion expense in the income statement. Explain to Anna how Portsmouth would account for the restoration if the restoration costs differed from the recorded liability in three years. By way of explanation, prepare the journal entry to record the payment of the retirement obligation in three years assuming that the actual restoration costs were $ 4.7 million. Describe to Anna the necessary disclosure requirements for the obligation. What specific Codification citation contains these disclosure requirements?
Blue Company purchases equipment on January 1, Year 1, at a cost of $600,000. The asset is expected to have a service life of 12 years and a salvage value of $54,000. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. (Round answers to 0 decimal places, e.g. 5,125.) Depreciation for Year 1 $enter a dollar amount rounded to 0 decimal places Depreciation for Year 2 $enter a dollar amount rounded to 0 decimal places Depreciation for Year 3 $enter a dollar amount rounded to 0 decimal places Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. Depreciation for Year 1 $enter a dollar amount Depreciation for Year 2 $enter a dollar amount Depreciation for Year 3 $enter a dollar amount Part 3 Compute the amount of depreciation for each of Years 1 through 3 using the…
Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Exercise 8-12 Double-declining-balance, partial-year depreciation LO C2 Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the double- declining-balance method. (Enter all amounts as positive values.) Depreciation for the Period End of Period. Beginning of Period Book Value Depreciation Rate Depreciation Expense Accumulated Annual Period Partial Year Book Value Depreciation Yoor 1
As the recently appointed auditor for Blossom Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30, 2023, are prepared. The controller for Blossom mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are as follows: INTANGIBLE L ) ) Research costs Legal costs to obtain patent Payment of seven months' rent on property leased by Blossom (February to August) Proceeds from issue of common shares Promotional expenses related to start-up of business Development stage costs (meet all six development stage criteria) Start-up costs for first six months of operations Show Transcribed Text Account Titles and Explanation (To correct intangible asset account) Show Transcribed Text ASSETS (To correct intangible asset account) (To record amortization expense) (To record amortization expense) Debit Debit 1,056,500 47,000 50,400 158,000 216,000 328,000 Credit Prepare the…
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On March 31, 2021, management of Quality Appliances committed to a plan to sell equipment. The equipment was available for immediate sale, and an active plan to locate a buyer was initiated. The equipment had been purchased on January 1, 2019, for $980,000. The equipment had an estimated six-year service life and residual value of $200,000. The equipment was being depreciated using the straight-line method. Quality’s fiscal year ends on December 31.Required:1. Calculate the equipment’s book value as of March 31, 2021 (Hint: Depreciation for 2021 would include up to March 31).2. By December 31, 2021, the equipment has not been sold, but management expects that it will be sold in 2022 for $654,000. For what amount is the equipment reported in the December 31, 2021, balance sheet?

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