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20170203155241excel_hw_week_4_template_3.xlsx
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Exercise 1

Exercise #1
On March 1, 2014, Rich Company acquired real estate on which it planned to construct a small office building. The company paid $80,000 in cash. An old warehouse on the property was razed at a cost of $9,400; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,100 attorney's fee for work concerning the land purchase, $5,000 real estate broker's fee, $7,800 architect's fee, and $12,700 to put in driveways and a parking lot.
Instructions
(a)   Determine the amount to be reported as the cost of the land.
Cost of Land -
(b)   For each cost not used in part (a), indicate the account to be debited.
Type of Fee Amount

Exercise 2

Exercise #2
Xi Company purchased a new machine on October 1, 2014, at a cost of $96,000. The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year life.
Instructions
Compute the depreciation expense under the following methods for the year indicated. 96,000 Asset Cost
Salvage Value
(a)   Straight-line for 2014. depreciable base = how much the asset depreciates over the useful life
Straight – line: Asset cost – Est. Salvage Value/ Number of accounting periods for estimated useful life.
Asset Cost 96,000
Salvage Value 12,000
Useful Life 5
Depreciation 96,000 cost of the asset
Depreciation per month - Accumulated Depreciation
Depreciation for 2014 3 months Oct - Dec Book value
(b)   Units-of-activity for 2014, assuming machine usage was 1,700 hours.
Depreciation per unit= Asset cost- Est. Salvage Value/Est. total units of production during useful life
Depreciate per period = Depreciation per unit x number of units of goods/services produced
Asset Cost 96,000
Salvage Value 12,000
Useful Life 10,000 96,000 cost of the asset
Depreciation per unit Accumulated Depreciation
Depreciation for 2014 Book value
(c)   Declining-balance using double the straight-line rate for 2014 and 2015.
Ignore salvage value for this calculation: 2 x (straight line rate ((Acquisition costs/useful life)) x (asset costs – accumulated depreciation).
2014 2015
Asset Cost 96,000 Asset Cost 96,000
double straight line rate 2015 Book Value
period 3 month double straight line rate
Depreciation for 2014 - Depreciation for 2015 -
96,000 cost of the asset 96,000 cost of the asset
- Accumulated Depreciation Accumulated Depreciation
Book value Book value

Exercise 3

Exercise #3
Foley Company owns equipment that cost $50,000 when purchased on January 1, 2011. It has been depreciated using the straight-line method based on estimated salvage value of $8,000 and an estimated useful life of 5 years.
Instructions
Prepare Foley Company's journal entries to record the sale of the equipment in these four independent situations.
Asset Cost $ 50,000
Salvage Value $ 8,000
Useful Life 5 2011 2012 2013 2014 2015 Calculate the book value on the date of the sale
Accumulated Depreciation Amount
Book Value Book Value = Cost - Accumulated depreciation
a. Sold for $28,000 on January 1, 2014. c. Sold for $11,000 on January 1, 2014.
Account Title Account Title
Step #1 cash
Step #2 the cost of the asset
Accumulated Depreciation
step #3 Compute the gain or loss
To record sale of equipment at a price greater than book value To record sale of equipment at a price less than book value
b. Sold for $28,000 on May 1, 2014. d. Sold for $11,000 on October 1, 2014.
Account Title Debit Credit Account Title
To record sale of equipment at a price less than book value
Always figure the gain or loss as the last step in the process additional 9 months depreciation expense and acc dep
Jan - Oct 1st
additional 4 months depreciation expense and acc dep
Jan - May 1st Account Title Debit Credit
Account Title Debit Credit

Exercise 4

Exercise #4
On July 1, 2014, Steff Inc. invested $720,000 in a mine estimated to have 800,000 tons of ore of uniform grade. During the last 6 months of 2014, 120,000 tons of ore were mined and sold.
Instructions Depletion costs per unit =
Assume that the 120,000 tons of ore were mined, but only 90,000 units were sold. How are the costs applicable to the 30,000 unsold units reported?
The balance sheet would show ore on hand a current asset at 30,000 tons times the cost per ton
2014 Balance sheet
Income statement

Exercise 5

Exercise #5
The stockholders' equity section of Able Corporation at December 31 is as follows.
Able Corporation Formulas for shares of stock
Balance Sheet (partial) issued issued
Paid-in capital -outstanding -treasury shares
Preferred stock, cumulative, 10,000 shares authorized, 5,000 shares issued and outstanding $300,000 treasury shares outstanding shares
Common stock, no par, 750,000 shares authorized, 600,000 shares issued 1,200,000
Total paid-in capital 1,500,000
Retained earnings 1,858,000
Total paid-in capital and retained earnings 3,358,000
Less: Treasury stock (75,000 common shares) 75,000
Total stockholders' equity $3,283,000
From a review of the stockholders' equity section, as chief accountant, write a memo to the president of the company answering the following questions.
a. How many shares of common stock are outstanding? equals issued minus treasury stock
b. Assuming there is a stated value, what is the stated value of the common stock? total value/number of issued
c. What is the par value of the preferred stock?
d. If the annual dividend on preferred stock is $30,000, what is the dividend rate on preferred stock?
e. If dividends of $60,000 were in arrears on preferred stock, what would be the balance in Retained Earnings?
Dividends in arrears never appear as a liability to a corporation because they are not a legal liability until declared by the board of directors.

Exercise 6

Exercise 6
The following accounts appear in the ledger of Alexis Inc. after the books are closed at December 31.
Common Stock, no par, $1 stated value, 400,000 shares authorized; 300,000 shares issued C C/S P/S
$300,000 A APIC
R RE
Paid-in Capital in Excess of Stated Value—Common Stock -TS
1,200,000
Preferred Stock, $5 par value, 8%, 40,000 shares authorized; 30,000 shares issued
150,000
Retained Earnings
564,000
Treasury Stock (10,000 common shares)
35,000
Paid-in Capital in Excess of Par—Preferred Stock
50,000
Instructions
Prepare the stockholders' equity section at December 31.