Exercise 8. On July 1, 20X1, Hunt Inc. invested $800,000 in a mine estimated to have 800,000 tons ofore of uniform grade. The land is expected to be sold for $80,000 after the ore has been extracted.During the last 6 months of 20X1, 100,000 tons of were mined and sold.a) Prepare the Adjusted Journal Entry to record this Deferred Cost at the end of the year.If we assume that only 80,000 of the 100,000 tons mined in 20X1 were actually sold in thisyear. Where would the costs of the 20,000 tons of unsold ore be reported?b)Name of AccountDatea)Exercise 9. The following are selected transactions of Franco Company for the current year. Based onthis information, prepare the Adjusted Journal Entries required at the end of the year.Jan 1- Purchased a small company and recorded goodwill of $150,000.a) How did the purchase of this company generate the asset goodwill of $150,000?Dec 31Debit Amount Credit Amountb) Show the year end Adjusting Journal Entry if it has been determined that $50,000 of theGoodwill has been impaired this year.May 1- Purchased a patent for $90,000 with an estimated useful life of 5 years and a legal life of 20years.DateDec 31Name of AccountDebit AmountCredit Amountmunications company. What if the

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Exercise 8. On July 1, 20X1, Hunt Inc. invested $800,000 in a mine estimated to have 800,000 tons of ore of uniform grade. The land is expected to be sold for $80,000 after the ore has been extracted. During the last 6 months of 20X1, 100,000 tons of were mined and sold. a) Prepare the Adjusted Journal Entry to record this Deferred Cost at the end of the year. If we assume that only 80,000 of the 100,000 tons mined in 20X1 were actually sold in this year. Where would the costs of the 20,000 tons of unsold ore be reported? b) Name of Account Date a) Debit Amount Credit Amount

Exercise 8. On July 1, 20X1, Hunt Inc. invested $800,000 in a mine estimated to have 800,000 tons of ore of uniform grade. The land is expected to be sold for $80,000 after the ore has been extracted. During the last 6 months of 20X1, 100,000 tons of were mined and sold. a) Prepare the Adjusted Journal Entry to record this Deferred Cost at the end of the year. If we assume that only 80,000 of the 100,000 tons mined in 20X1 were actually sold in this year. Where would the costs of the 20,000 tons of unsold ore be reported? b) Name of Account Date a) Debit Amount Credit Amount

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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Question D
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onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
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