1-Bera Company pays $264,900 for equipment expected to last four years and have
ID: 2443958 • Letter: 1
Question
1-Bera Company pays $264,900 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment.1.
During the second year of the equipment’s life, $29,500 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year.
2.
During the third year, $7,375 cash is paid for normal repairs necessary to keep the equipment in good working order.
3.
During the fourth year, $22,450 is paid for repairs expected to increase the useful life of the equipment from four to five years. (Omit the "$" sign in your response)
General Journal Debit Credit
1. ?
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2. ?
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3. ?
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2-Rayya Co. purchases and installs a machine on January 1, 2009, at a total cost of $94,000. Straight-line depreciation is taken each year for four years assuming an eight-year life and no salvage value. The machine is disposed of on July 1, 2013, during its fifth year of service.
Requirement 1:
Prepare entry to record the partial year’s depreciation on July 1, 2013. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
July 1 ?
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Requirement 2:
Prepare entry to record the disposal under the assumption that the machine is sold for $43,593 cash. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
July 1 ?
?
?
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3-On April 2, 2009, Mitzu Mining Co. pays $3,920,000 for an ore deposit containing 1,400,000 tons. The company installs machinery in the mine costing $210,000, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Mitzu began mining on May 1, 2009, and mines and sells 178,200 tons of ore during the remaining eight months of 2009. Prepare the December 31, 2009, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Dec. 31 ?
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Dec. 31 ?
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4-Galvano Gallery purchases the copyright on an oil painting for $432,000 on January 1, 2009. The copyright legally protects its owner for 19 more years. However, the company plans to market and sell prints of the original for only 15 years. Prepare entries to record the purchase of the copyright on January 1, 2009, and its annual amortization on December 31, 2009. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 1 ?
?
Dec. 31 ?
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Explanation / Answer
1-Bera Company pays $264,900 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1.During the second year of the equipment’s life, $29,500 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year. Asset a/c Dr 29,500 Cash Cr. 29500 2.During the third year, $7,375 cash is paid for normal repairs necessary to keep the equipment in good working order. Asset Maint a/c Dr 7375 Cash Cr 7375 3.During the fourth year, $22,450 is paid for repairs expected to increase the useful life of the equipment from four to five years. (Omit the "$" sign in your response) Asset a/c Dr 22450 Cash Cr. 22450 2-Rayya Co. purchases and installs a machine on January 1, 2009, at a total cost of $94,000. Straight-line depreciation is taken each year for four years assuming an eight-year life and no salvage value. The machine is disposed of on July 1, 2013, during its fifth year of service. Annual Dep = 94000/8 = 11750. In 2013, Dep for 6 months = 11750/2 = 5875 Requirement 1: Prepare entry to record the partial year’s depreciation on July 1, 2013. (Omit the "$" sign in your response.) 1 Jul 2013 Depreciation Expense Dr 5875 Accumulated Depreciation Cr 5875 Requirement 2: Prepare entry to record the disposal under the assumption that the machine is sold for $43,593 cash. (Omit the "$" sign in your response.) 1 Jul 2013 Accumulated Depreciation Dr 52875 Cash Dr 43593 Asset A/C Cr 94000 Gain on disposal of Machine Cr 2468 (Accum Dep for 4.5 Yrs = 11750*4+5875 = 52875) 3-On April 2, 2009, Mitzu Mining Co. pays $3,920,000 for an ore deposit containing 1,400,000 tons. The company installs machinery in the mine costing $210,000, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Mitzu began mining on May 1, 2009, and mines and sells 178,200 tons of ore during the remaining eight months of 2009. Prepare the December 31, 2009, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. (Omit the "$" sign in your response.) Depletion per ton = depletion base/eatimated units = $3920,000/1400,000 = $2.8 per ton So for 178,200 tons of depletion, depletion charge will be 178200*$2.8 = $498,960 Depreciation in prop to deplton = (178200/1400,000)*$210,000 = $26,730 Dec. 31 2009 Cost of Ore Sold Dr $498,960 Ore Deposit depletion Cr $498,960 Dec. 31 2009 Depreciation Expense Dr $26730 Accumulated Depreciation Cr $26730 4-Galvano Gallery purchases the copyright on an oil painting for $432,000 on January 1, 2009. The copyright legally protects its owner for 19 more years. However, the company plans to market and sell prints of the original for only 15 years. Prepare entries to record the purchase of the copyright on January 1, 2009, and its annual amortization on December 31, 2009. (Omit the "$" sign in your response.) Copyrights provide their owners with the exclusive right to produce or sell an artistic or published work. A copyright has a legal life of 19 years; the economic life is 15 Year. The economic life is the period of time over which the cost of a copyright should be amortized. So annual amortization = $432000/15 = $28800 Jan. 1 2009 COpyright Dr $432,000 Cash Cr $432,000 Dec. 31 Amortization Expense Dr $28800 Copyright Cr 28800
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