TRANSACTION ANALYSIS: Jensen Corp. is a biopharmaceutical company that develops
ID: 2589913 • Letter: T
Question
TRANSACTION ANALYSIS: Jensen Corp. is a biopharmaceutical company that develops and commercializes products targeting the extracellular matrix for the endocrinology, dermatology, and drug delivery markets.
Transaction 1A – January 1, Y3: On January 1, Y3 Jensen Corp. purchased a lab vacuum pump for $30,000 on account. The estimated residual value was $10,000 and the estimated useful life was five years. Jensen Company depreciates equipment using the straight-line method. Give the journal entry for the purchase of the equipment.
a. Indicate the account title to be debited by $30,000.
b. Indicate the account title to be credited by $30,000.
Transaction 1B – December 31, Y3: Give the adjusting entry that was made at the end of Y3 for the depreciation on the equipment.
c. Compute the depreciation expense (straight-line method).
d. Indicate the account title to be debited by the above amount.
e. Indicate the account title to be credited by the above amount.
f.
Transaction 1C – December 31, Y5: On December 31, Y5 the Accumulated Depreciation account had balance of $12,000. On December 31, Y5 Jensen Company sold the vacuum pump for $19,000 cash. Give all journal entries related to the disposal of the vacuum pump.
g. Indicate the account title to be debited by $19,000.
h. Indicate the account title to be debited by $12,000.
i. Indicate the account title to be credited by $30,000
j. Indicate the account title to be credited by $1,000.
Explanation / Answer
Transaction 1A – January 1, Y3: On January 1, Y3 Jensen Corp. purchased a lab vacuum pump for $30,000 on account. The estimated residual value was $10,000 and the estimated useful life was five years. Jensen Company depreciates equipment using the straight-line method. Give the journal entry for the purchase of the equipment.
a. Indicate the account title to be debited by $30,000 = Lab vaccum pump a/c
b. Indicate the account title to be credited by $30,000. = Account payable a/c
Transaction 1B – December 31, Y3: Give the adjusting entry that was made at the end of Y3 for the depreciation on the equipment
c. Compute the depreciation expense (straight-line method).
Depreciation expenses = (30000-10000)/5 =$4000
d. Indicate the account title to be debited by the above amount = depreciation expenses a/c
e. Indicate the account title to be credited by the above amount = Accumlated depreciation a/c
Transaction 1C – December 31, Y5: On December 31, Y5 the Accumulated Depreciation account had balance of $12,000. On December 31, Y5 Jensen Company sold the vacuum pump for $19,000 cash. Give all journal entries related to the disposal of the vacuum pump.
f) journal entry :
g. Indicate the account title to be debited by $19,000= cash a/c
h. Indicate the account title to be debited by $12,000=accumlated depreciation a/c
i. Indicate the account title to be credited by $30,000 = Vacuum pump a/c
j. Indicate the account title to be credited by $1,000= Profit on sale of vacuum pump
Date accounts & explanation debit credit cash a/c 19000 accumlated depreciation a/c 12000 Profit on sale of vacuum pump 1000 Vacuum pump a/c 30000 (To record sale of vacuum pump)Related Questions
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