Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions during a recent year. January 2 Purchased a tour bus for $90,000 by paying $31,000 cash and signing a $59,000 note due in two years. In its accounting system, the company records the vehicle distinct from other types of equipment. January 8 After the bus was used for nearly one week, it was painted with the logos of the two bands at a cost of $900, on account. The logos did not increase the lifespan, operating capacity, or operating efficiency of the bus, but they were thought to be useful in promoting the bands. January 30 Wrote a check for the amount owed on account for the work completed on January 8. February 1 Purchased new speakers and amplifiers and wrote a check for the full $28,500 cost. February 8 Paid $800 cash for minor repairs to the tour bus. March 1 March 31 Paid $31,000 cash and signed a $245,000 five-year note to purchase a small office building and land. An appraisal indicated that the building and land contributed equally to the total price. Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris' Myth, Incorporated. The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for recording equipment.
Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions during a recent year. January 2 Purchased a tour bus for $90,000 by paying $31,000 cash and signing a $59,000 note due in two years. In its accounting system, the company records the vehicle distinct from other types of equipment. January 8 After the bus was used for nearly one week, it was painted with the logos of the two bands at a cost of $900, on account. The logos did not increase the lifespan, operating capacity, or operating efficiency of the bus, but they were thought to be useful in promoting the bands. January 30 Wrote a check for the amount owed on account for the work completed on January 8. February 1 Purchased new speakers and amplifiers and wrote a check for the full $28,500 cost. February 8 Paid $800 cash for minor repairs to the tour bus. March 1 March 31 Paid $31,000 cash and signed a $245,000 five-year note to purchase a small office building and land. An appraisal indicated that the building and land contributed equally to the total price. Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris' Myth, Incorporated. The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for recording equipment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question
![Required information
CP9-3 (Algo) Analyzing and Recording Long-Lived Asset Transactions with Partial-Year Depreciation [LO
9-2, LO 9-3, LO 9-6]
[The following information applies to the questions displayed below.]
Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions
during a recent year.
January 2 Purchased a tour bus for $90,000 by paying $31,000 cash and signing a $59,000 note due in two
years. In its accounting system, the company records the vehicle distinct from other types of
equipment.
January 8 After the bus was used for nearly one week, it was painted with the logos of the two bands at a
cost of $900, on account. The logos did not increase the lifespan, operating capacity, or
operating efficiency of the bus, but they were thought to be useful in promoting the bands.
January 30 Wrote a check for the amount owed on account for the work completed on January 8.
February 1 Purchased new speakers and amplifiers and wrote a check for the full $28,500 cost.
February 8 Paid $800 cash for minor repairs to the tour bus.
March 1 Paid $31,000 cash and signed a $245,000 five-year note to purchase a small office building and
land. An appraisal indicated that the building and land contributed equally to the total price.
March 31 Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris' Myth, Incorporated.
The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for
recording equipment.
CP9-3 (Algo) Part 1-b to 3
1-b. Prepare the journal entries for each of the above transactions.
2. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and
amortization that Palmer Cook Music Productions should report for the quarter ended March 31. For convenience, the equipment
and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no residual value. The
building is depreciated using the double-declining-balance method, with a 8-year useful life and residual value of $31,000. TIP:
Calculate depreciation from the acquisition date to the end of the quarter.
3. Prepare a journal entry to record the depreciation calculated in requirement 2.
Complete this question by entering your answers in the tabs below.
Req 1B
Req 2
Vehicles
Equipment
Buildings
For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and
amortization that Palmer Cook Music Productions should report for the quarter ended March 31. For convenience, the
equipment and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no
residual value. The building is depreciated using the double-declining-balance method, with a 8-year useful life and residual
value of $31,000. TIP: Calculate depreciation from the acquisition date to the end of the quarter. (Do not round intermediate
calculations.)
Req 3
Partial Year
< Req 1B
Req 3 >
Show less](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b3f7f60-ea7d-412d-bfab-14e1e3d92302%2F553a9cf9-e0b8-4be8-85d4-702dc8009bde%2Fys8hhif_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
CP9-3 (Algo) Analyzing and Recording Long-Lived Asset Transactions with Partial-Year Depreciation [LO
9-2, LO 9-3, LO 9-6]
[The following information applies to the questions displayed below.]
Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions
during a recent year.
January 2 Purchased a tour bus for $90,000 by paying $31,000 cash and signing a $59,000 note due in two
years. In its accounting system, the company records the vehicle distinct from other types of
equipment.
January 8 After the bus was used for nearly one week, it was painted with the logos of the two bands at a
cost of $900, on account. The logos did not increase the lifespan, operating capacity, or
operating efficiency of the bus, but they were thought to be useful in promoting the bands.
January 30 Wrote a check for the amount owed on account for the work completed on January 8.
February 1 Purchased new speakers and amplifiers and wrote a check for the full $28,500 cost.
February 8 Paid $800 cash for minor repairs to the tour bus.
March 1 Paid $31,000 cash and signed a $245,000 five-year note to purchase a small office building and
land. An appraisal indicated that the building and land contributed equally to the total price.
March 31 Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris' Myth, Incorporated.
The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for
recording equipment.
CP9-3 (Algo) Part 1-b to 3
1-b. Prepare the journal entries for each of the above transactions.
2. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and
amortization that Palmer Cook Music Productions should report for the quarter ended March 31. For convenience, the equipment
and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no residual value. The
building is depreciated using the double-declining-balance method, with a 8-year useful life and residual value of $31,000. TIP:
Calculate depreciation from the acquisition date to the end of the quarter.
3. Prepare a journal entry to record the depreciation calculated in requirement 2.
Complete this question by entering your answers in the tabs below.
Req 1B
Req 2
Vehicles
Equipment
Buildings
For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and
amortization that Palmer Cook Music Productions should report for the quarter ended March 31. For convenience, the
equipment and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no
residual value. The building is depreciated using the double-declining-balance method, with a 8-year useful life and residual
value of $31,000. TIP: Calculate depreciation from the acquisition date to the end of the quarter. (Do not round intermediate
calculations.)
Req 3
Partial Year
< Req 1B
Req 3 >
Show less
Transcribed Image Text:Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions
during a recent year.
January 2 Purchased a tour bus for $90,000 by paying $31,000 cash and signing a $59,000 note due in two
years. In its accounting system, the company records the vehicle distinct from other types of
equipment.
January 8 After the bus was used for nearly one week, it was painted with the logos of the two bands at a
cost of $900, on account. The logos did not increase the lifespan, operating capacity, or
operating efficiency of the bus, but they were thought to be useful in promoting the bands.
January 30 Wrote a check for the amount owed on account for the work completed on January 8.
February 1 Purchased new speakers and amplifiers and wrote a check for the full $28,500 cost.
February 8 Paid $800 cash for minor repairs to the tour bus.
March 31
March 1 Paid $31,000 cash and signed a $245,000 five-year note to purchase a small office building and
land. An appraisal indicated that the building and land contributed equally to the total price.
Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris' Myth, Incorporated.
The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for
recording equipment.
CP9-3 (Algo) Part 1-b to 3
1-b. Prepare the journal entries for each of the above transactions.
2. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and
amortization that Palmer Cook Music Productions should report for the quarter ended March 31. For convenience, the equipment
and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no residual value. The
building is depreciated using the double-declining-balance method, with a 8-year useful life and residual value of $31,000. TIP:
Calculate depreciation from the acquisition date to the end of the quarter.
3. Prepare a journal entry to record the depreciation calculated in requirement 2.
Complete this question by entering your answers in the tabs below.
Req 1B
Req 2
Prepare a journal entry to record the depreciation calculated in requirement 2. (Do not round intermediate calculations. If no entry is
required for a transaction/event, select "No Journal Entry Required" in the first account field.)
View transaction list
1
Journal entry worksheet
Req 3
Record the depreciation expense for the three assets at the end of the quarter.
Note: Enter debits before credits.
Date
March 31
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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