Assignment

Answer all Questions

Problem #1

Sunshine Corporation purchases an equipment for its New Haven location at a cost of $18,000 on January 1, 2012. The company management expects the machine to have a salvage value of $2,000 at the end of its 4-year useful life. During its useful life, the machine is expected to be used for 160,000 hours.

The actual annually use was:

2012       40,000 hours
2013       60,000 hours
2014       35,000
2015       25,000

Instructions:

Prepare depreciation schedules for the following methods

a. Straight-line depreciation method
b. Units-of-output depreciation method
c. Double-declining balance depreciation method

Problem #2 (A)

Gordon Corporation owns an equipment truck originally purchased for $30,000, and it has accumulated depreciation of $16,000 on the equipment truck. Gordon has decided to sell the equipment truck.

Instructions:

a. Prepare journal entry to record the sale of the equipment truck for $17,0000 cash
b. Prepare journal entry to record the sale of the equipment truck for $10,000 cash

Problem #2 (B)

XYZ Corporation owns an equipment truck originally purchased for $50,000. The machine is expected to have a 10-year life with a $2,000 salvage value. The company uses a straight-line method of depreciation and provide you with the two independent cases:

a. Prepare the journal entry to record the sale of the machine for $35,000 after 6 years of ownership.
b. Prepare the journal entry to record the sale of the machine for $8,000 after 8 years of ownership.

Problem #3

Georgia Corporation was organized on January 1, 2012. Prepare journal entries to record each of the following independent stock issue transactions.

a. Issue 80,000 shares of common stock for cash at $4 per share. The par value of the share is $2 per share.

b. Issued 5,000 shares of preferred stock for cash at $105 per share. The par value of the share is $100 par value

c. Issued 24,000 shares of $2 per value common stock for land. The asking price for the land is $90,000 and the fair market value for the land was $85,000.

d. Issued 80,000 shares of common stock for cash at $4.50 per share. The par value of the share is $2 per share.

e. Issued 10,000 shares of common stock for cash at $5 per share. The par value of the share is $2 per share.

f. Issue 1,000 shares of preferred stock for cash at $109 per share. The par value of the share is $2 per share.

Problem #5

Selected financial information and additional data for James Worthy Co. is presented below.

                                        2012                     2013
Cash                               $84,000               $150,000
Accounts Receivable          $168,000             $288,400
Inventory                         $336,000             $403,200
Equipment                        $1,008,000          $1,579,200
Land                                $117,600             $32,000
Total                                $1,713,600          2,452,800
Accounts payable              $100,800             $172,000
Short-term notes payable  $134,400             $58,800
Common stock                 $840,000             $974,400
Retained earnings             $134,400             $411,600
Total                               $1,713,600          $2,452,800

Additional information for 2013:

1. Net Income was $480,400
2. Depreciation was $63,200
3. Dividends paid was $203,200
4. Land was sold at its original cost
5. Equipment was purchased for $168,000 cash
6. Common stock was issued to pay a $134,400 long-term note payable
7. A long-term note for $403,200 was used to pay for an equipment purchase

Instructions:

Using indirect method, prepare a statement of cash flows for the year ending December 31, 2013.