During its first year of operations, Henley Company had credit sales of $3,000,000; $600,000 remained uncollected at year-end. The credit manager estimates that $35,000 of these receivables will become uncollectible.
(a) Prepare the journal entry to record the estimated uncollectible.
(b) Prepare the current assets section of the balance sheet for Henley Company. Assume that in addition to the receivables it has cash of $90,000, merchandise inventory of $130,000, and prepaid expenses of $7,500.
Prepare entry for allowance method and partial balance sheet.
(SO 3, 9)
Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows: buildings $1,100,000; accumulated depreciation—buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion—coal mine $108,000. Prepare a partial balance sheet of Spain Company for these items.
Classify long-lived assets on balance sheet.
Do It! 9-4
Match the statement with the term most directly associated with it.
(b) Intangible assets
(c) Research and development costs
1. _________ Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.
2. _________ The allocation of the cost of an intangible asset to expense in a rational and systematic manner.
3. _________ A right to sell certain products or services, or use certain trademarks or trade names within a designated geographic area.
4. _________ Costs incurred by a company that often lead to patents or new products. These costs must be expensed as incurred.
5. _________ The excess of the cost of a company over the fair market value of the net assetsacquired.
Match intangibles classifications concepts.
(SO 7, 8)
Presented below are selected transactions at Ingles Company for 2011.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2008. The computer cost $40,000. It had a useful life of 5 years with no salvage value. The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Beka Company owns equipment that cost $50,000 when purchased on January 1, 2008. It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years.
Journalize entries for disposal of equipment.
At December 31, 2011, Jimenez Company reported the following as plant assets.
Land $ 4,000,000
Less: Accumulated depreciation—buildings 12,100,000 16,400,000
Less: Accumulated depreciation—equipment 5,000,000 43,000,000
Total plant assets $63,400,000
During 2012, the following selected cash transactions occurred.
April 1 Purchased land for $2,130,000.
May 1 Sold equipment that cost $780,000 when purchased on January 1, 2008. The equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 2002 for $1,500,000. The land cost $400,000.
July 1 Purchased equipment for $2,000,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2002. No salvage value was received.
Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.
(SO 3, 6, 9)
(a) Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2012.
(c) Prepare the plant assets section of Jimenez’s balance sheet at December 31, 2012.
Total plant assets $61,270,000