ACC 201 Chapter 9 Problem set A

Problem 9-1A

Ripley Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.

Analyze the foregoing transactions using the following column headings. Insert the amounts in the appropriate columns. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)

Problem 9-2A (Part Level Submission)

In recent years, Freeman Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized below.

For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were: 2013, 24,000; 2014, 36,000; and 2015, 31,000.

Problem 9-3A (Part Level Submission)

On January 1, 2014, Thao Company purchased the following two machines for use in its production process.

 

Problem 9-4A

At the beginning of 2012, Mansen Company acquired equipment costing $80,000. It was estimated that this equipment would have a useful life of 6 years and a residual value of $8,000 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year.

During 2014 (the third year of the equipment’s life), the company’s engineers reconsidered their expectations, and estimated that the equipment’s useful life would probably be 7 years (in total) instead of 6 years. The estimated residual value was not changed at that time. However, during 2017 the estimated residual value was reduced to $4,400.

Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table. (Round answers to 0 decimal places, e.g. $2,125.)

Problem 9-6A

Yount Co. has equipment that cost $50,000 and that has been depreciated $22,000. Record the disposal under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 9-7A (Part Level Submission)

The intangible assets section of Glover Company at December 31, 2013, is presented below.

The patent was acquired in January 2013 and has a useful life of 10 years. The franchise was acquired in January 2010 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2014.

Problem 9-8A

Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by the Buek Company in 2014.

Prepare all journal entries necessary to correct any errors made during 2014. Assume the books have not yet been closed for 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 9-9A

Dirkson Company and Hawkins Corporation, two corporations of roughly the same size, are both involved in the manufacture of in-line skates. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information.

For each company, calculate the asset turnover ratio. (Round answer to 2 decimal places, e.g. 0.60.)

 

 

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