Concept explainers
Journalize entries to record all the preceding events.
Explanation of Solution
Property, Plant, and Equipment:
Property, Plant, and Equipment refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.
Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Accounting rules for Journal entries:
- To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
- To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains
Prepare journal entries:
Date | Account titles and explanation | Debit ($) | Credit ($) |
Investment in Land | 74,000 | ||
Cash | 74,000 | ||
(To record the land acquired) | |||
Land (1) | 50,000 | ||
Buildings (2) | 150,000 | ||
Common Stock, $3 par | 60,000 | ||
Additional Paid-In Capital on Common Stock | 140,000 | ||
(To record the buildings land acquired through issuance of common stock) | |||
Equipment | 153,000 | ||
Repair and Maintenance Expense | 2,000 | ||
Cash | 155,000 | ||
( To record the expenses associated with equipment) | |||
Land Improvements | 30,000 | ||
Cash | 30,000 | ||
(To record the instalment of new parking lot) | |||
Land (5) | 60,000 | ||
Buildings (6) | 78,000 | ||
Investment in Land | 37,000 | ||
Cash | 101,000 | ||
( To record the costs associated with land and building) | |||
Leasehold Improvements | 20,000 | ||
Cash | 20,000 | ||
(To record the leasehold improvements) | |||
Equipment | 32,000 | ||
Cash | 32,000 | ||
( To record the purchase of equipment) | |||
Royalty Expense | 12,000 | ||
Cash | 12,000 | ||
( To record the royalty payments) |
Table (1)
Working notes:
(1) Calculate the amount of land:
(2) Calculate the amount of buildings (factory):
(3) Calculate the value of common stock:
(4) Calculate the amount of equipment:
(5) Calculate the amount of land:
Note: $37,000 is the half value of land acquired
(6) Calculate the amount of buildings:
Want to see more full solutions like this?
Chapter 10 Solutions
EBK INTERMEDIATE ACCOUNTING: REPORTING
- Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016, when Classic issued common shares for $300,000. Early in January 2016, Classic made the following cash payments: $150,000 for equipment $120,000 for inventory (four cars at $30,000 each) $20,000 for 2016 rent on a store building In February 2016, Classic purchased six cars for inventory on account. Cost of this inventory was $260,000 ($43,333.33 each). Before year-end, Classic paid $208,000 of this debt. Classic uses the FIFO method to account for inventory. During 2016, Classic sold eight vintage autos for a total of $500,000. Before year-end, Classic collected 80% of this amount. The business employs three people. The combined annual payroll is $95,000, of which Classic owes $4,000 at year-end. At the end of the year, Classic paid an income tax of $10,000. Late in 2016, Classic declared and paid cash dividends of $11,000. For equipment, Classic uses the straight-line depreciation method over five years with zero…arrow_forwardOn December 31, 2015, the net assets of Martinez Manufacturing amounted to $40,000. Net income calculated by using the financial capital maintenance concept amounted to $12,000. During the year, additional common stock was issued for $8,000, and $5,000 of dividends was paid. The net assets at January 1, 2015, amounted to $20,000. $25,000. $31,000. $37,000.arrow_forward(Post-Balance-Sheet Events) Madrasah Corporation issued its financial statements for the year ended December 31, 2017, on March 10, 2018. The following events took place early in 2018.(a) On January 10, 10,000 shares of $5 par value common stock were issued at $66 per share.(b) On March 1, Madrasah determined after negotiations with the Internal Revenue Service that income taxes payable for 2017 should be $1,270,000. At December 31, 2017, income taxes payable were recorded at $1,100,000.InstructionsDiscuss how the preceding post-balance-sheet events should be reflected in the 2017 financial statementsarrow_forward
- The ABC Corporation was formed on January 1, 2017. The three initial owners each invested $400,000 cash and each received 40,000 shares of $1 par value common stock. Below are selected transactions that were completed during January 2017. 1. Issue shares of common stock to the owners. 2. Borrowed $320,000 on a one-year note payable. 3. Purchased land by signing a $280,000 note payable. 4. Paid $40,000 of accounts payable. 5. Purchased two service vehicles for cash at a cost of $96,000 each. 6. Purchased $8,000 of supplies on credit. Question: Prepare the journal entries on ABC's books for each transaction.arrow_forwardThe Staples Company had the following transactions occur during 2015: (a) Issued 8,000 shares of common stock to the founders for land valued at $275,000. Par value of the common stock is $1 per share. (b) Issued 4,000 shares of $100 par preferred stock for cash at $120 per share. (c) Sold 2,500 shares of common stock to the company president for $45 per share. (d) Purchased 750 shares of outstanding preferred stock issued in (b) for cash at par. (e) Purchased 2,000 shares of the outstanding common stock issued in (a) for $39 per share. (f) Reissued 400 shares of repurchased preferred stock at $112. (g) Reissued 500 shares of reacquired common stock for $45 per share. (h) Repurchased 200 shares of the common stock sold in (g) for $43 per share. These same 200 shares were later reissued for $40 per share. (i) A dividend of $3 per share was declared on outstanding preferred stock. (j) Staples decided to retire 100 shares of Preferred Treasury…arrow_forwardIn 2012, ABC Corporation purchased treasury stock with a cost of $25,000. During the year, the company paid dividends of $15,000 and issued bonds payable for $750,000. Cash flows from financing activities for 2012 are _____.arrow_forward
- On December 1, 2011, Millstone Corporation invested $45,000 in a new delivery truck. The truckis being depreciated at a monthly rate of $500. During 2011, the company issued stock for $60,000and declared dividends of $5,000. Its net income in 2011 was $70,000. Millstone’s ending RetainedEarnings balance as reported in its December 31, 2011, balance sheet was $90,000. Its beginningCapital Stock balance on January 1, 2011, was $200,000. Given this information, determine thetotal stockholders’ equity reported in the company’s balance sheet dated December 31, 2011.arrow_forwardOn December 31, 2014, Bradshaw Corporation had $485,000 as an ending balance for its retained earnings account. During 2015, the corporation declared a $3.50/share dividend to its stockholders. The company has 35,000 shares of common stock outstanding. When the books were closed for 2015 year end, the corporation had a final retained earnings balance of $565,000. What was the net profit earned by Bradshaw Corporation during 2015?arrow_forwardThe Staples Company had the following transactions occur during 2015: • (a) Issued 8,000 shares of common stock to the founders for land valued at $275,000. Par value of the common stock is $1 per share. . . • (d) Purchased 750 shares of outstanding preferred stock issued in (b) for cash at par. (b) Issued 4,000 shares of $100 par preferred stock for cash at $120 per share. . (c) Sold 2,500 shares of common stock to the company president for $45 per share. . • (f) Reissued 400 shares of repurchased preferred stock at $112. (e) Purchased 2,000 shares of the outstanding common stock issued in (a) for $39 per share. (g) Reissued 500 shares of reacquired common stock for $45 per share. (h-1) Repurchased 200 shares of the common stock sold in (g) for $43 per share. (h-2)These same 200 shares were later reissued for $40 per share. (i) A dividend of $3 per share was declared on outstanding preferred stock. INSTRUCTIONS: 1. Prepare the necessary entries for the common stock transactions…arrow_forward
- During 2012, Young Company had the following transactions: a. Cash dividends of $10,000 were paid. b. Equipment was sold for $4,800. It had an original cost of $18,000 and a book value of $9,000. The loss is included in operating expenses. c. Land with a fair market value of $25,000 was acquired by issuing common stock with a par value of $6,000. d. One thousand shares of preferred stock (no par) were sold for $7 per share. Young Company provided the following income statement (for 2012) and comparative balance sheets: Sales.................................... $ 246,000 Less: Cost of goods sold............. (150,000) Gross margin........................... $ 96,000 Less: Operating expenses............. (66,000) Net income.............................. $ 30,000 Required: Prepare a worksheet for Young Companyarrow_forwardBrisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2017. Expenses for 2017 were cost of goods sold $1,450,000, administrative expenses $212,000, selling expenses $280,000, and interest expense $45,000. Brisky’s tax rate is 30%. The corporation had 100,000 shares of common stock authorized and 70,000 shares issued and outstanding during 2017. Prepare a single-step income statement for the year ended December 31, 2017.arrow_forwardPhelps, Inc. had assets of $84,556, liabilities of $18,556, and 12,778 shares of outstanding common stock at December 31, 2017. Net income for 2017 was $9,456. The company had assets of $99,361, liabilities of $22,261, 11,401 shares of outstanding common stock, and its stock was trading at a price of $10 per share at December 31, 2018. Net income for 2018 was $10,598. Required: a. Calculate EPS for 2018. b. Calculate ROE for 2018. c. Calculate the Price/Earnings Ratio for 2018. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate EPS for 2018. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) EPSarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education