Instructions X Chart of Accounts ASSETS REVENUE Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: 110 Cash 410 Sales A. Timber rights on a tract of land were purchased for $1,762,820 on February 22. The stand of timber is estimated at 4,639,000 board feet. 111 Petty Cash 610 Interest Revenue During the current year, 1,068,200 board feet of timber were cut and sold. 112 Accounts Receivable 620 Gain on Sale of Vehicles 621 Gain on Sale of Equipment B. On December 31, the company determined that $4,015,000 of goodwill was impaired. C. Governmental and legal costs of S6,846,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. 114 Interest Receivable 115 Notes Receivable 622 Gain on Sale of Timber Rights Amortization is to be for three-fourths of a year. 116 Merchandise Inventory 623 Gain from Sale of Goodwill 117 Supplies Required: 119 Prepaid Insurance EXPENSES 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. 120 Land 510 Cost of Merchandise Sold 2. Jourmalize the adjusting entries required to record the amortization, depletion, or impairment for esch item. Refer to the Chart of Accounts for 123 Vehicles 124 Accumulated Depreciation-Vehicles 520 Salaries Expense exact wording of account titles. 521 Advertising Expense 125 Equipment 522 Depreciation Expense-Vehicles 126 Accumulated Depreciation-Equipment 523 Delivery Expense Starting questions 130 Timber Rights 524 Repairs and Maintenance Expense 131 Accumulated Depletion 529 Selling Expenses 132 Goodwill 531 Rent Expense 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the items in the Instructions. 133 Patents 532 Depreciation Expense-Equipment 533 Depletion Expense A. LIABILITIES 534 Amortization Expense-Patents B. 210 Accounts Payable 535 Insurance Expense C. 211 Salaries Payable 536 Supplies Expense 213 Sales Tax Payable 214 Interest Payable 539 Miscellaneous Expense 710 Interest Expense 215 Notes Payable 720 Loss on Sale of Vehicles 721 Loss on Sale of Equipment EQUITY 722 Loss on Sale of Timber Rights 310 Common Stock 723 Loss from Impaired Goodwill 311 Retained Eamings 312 Dividends

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows.

Required:

1. Determine the amount of the amorization, depletion, or impairment for the current year for each of the foregoing items.

2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for exact wording of account titles.

Instructions
X Chart of Accounts
ASSETS
REVENUE
Data related to the acquisition of timber rights and intangible assets during the curent year ended December 31 are as follows:
110 Cash
410 Sales
A. Timber rights on a tract of land were purchased for $1,762,820 on February 22. The stand of timber is estimated at 4,639,000 board feet.
111 Petty Cash
610 Interest Revenue
During the current year, 1,068,200 board feet of timber were cut and sold.
112 Accounts Receivable
620 Gain on Sale of Vehicles
B. On December 31, the company determined that S4,015,000 of goodwill was impaired.
114 Interest Receivable
621 Gain on Sale of Equipment
C. Governmental and legal costs of $6,846,000 were incurred on April 3 in obtaining a patent with an estimated economic life
of 10 years.
622 Gain on Sale of Timber Rights
115 Notes Receivable
Amortization is to be for three-fourths of a year.
116 Merchandise Inventory
623 Gain from Sale of Goodwill
117 Supplies
Required:
119 Prepaid Insurance
EXPENSES
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
120 Land
510 Cost of Merchandise Sold
2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for
520 Salaries Expense
123 Vehicles
exact wording of account titles.
124 Accumulated Depreciation-Vehicles
521 Advertising Expense
125 Equipment
522 Depreciation Expense-Vehicles
126 Accumulated Depreciation-Equipment
523 Delivery Expense
Starting questions
130 Timber Rights
524 Repairs and Maintenance Expense
131 Accumulated Depletion
529 Selling Expenses
132 Goodwill
531 Rent Expense
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the items in the Instructions.
133 Patents
532 Depreciation Expense-Equipment
533 Depletion Expense
A.
Is
LIABILITIES
534 Amortization Expense-Patents
B.
IS
210 Accounts Payable
535 Insurance Expense
C.
Is
211 Salaries Payable
536 Supplies Expense
213 Sales Tax Payable
539 Miscellaneous Expense
214 Interest Payable
710 Interest Expense
215 Notes Payable
720 Loss on Sale of Vehicles
721 Loss on Sale of Equipment
EQUITY
722 Loss on Sale of Timber Rights
310 Common Stock
723 Loss from Impaired Goodwill
311 Retained Earnings
312 Dividends
Transcribed Image Text:Instructions X Chart of Accounts ASSETS REVENUE Data related to the acquisition of timber rights and intangible assets during the curent year ended December 31 are as follows: 110 Cash 410 Sales A. Timber rights on a tract of land were purchased for $1,762,820 on February 22. The stand of timber is estimated at 4,639,000 board feet. 111 Petty Cash 610 Interest Revenue During the current year, 1,068,200 board feet of timber were cut and sold. 112 Accounts Receivable 620 Gain on Sale of Vehicles B. On December 31, the company determined that S4,015,000 of goodwill was impaired. 114 Interest Receivable 621 Gain on Sale of Equipment C. Governmental and legal costs of $6,846,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. 622 Gain on Sale of Timber Rights 115 Notes Receivable Amortization is to be for three-fourths of a year. 116 Merchandise Inventory 623 Gain from Sale of Goodwill 117 Supplies Required: 119 Prepaid Insurance EXPENSES 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. 120 Land 510 Cost of Merchandise Sold 2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for 520 Salaries Expense 123 Vehicles exact wording of account titles. 124 Accumulated Depreciation-Vehicles 521 Advertising Expense 125 Equipment 522 Depreciation Expense-Vehicles 126 Accumulated Depreciation-Equipment 523 Delivery Expense Starting questions 130 Timber Rights 524 Repairs and Maintenance Expense 131 Accumulated Depletion 529 Selling Expenses 132 Goodwill 531 Rent Expense 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the items in the Instructions. 133 Patents 532 Depreciation Expense-Equipment 533 Depletion Expense A. Is LIABILITIES 534 Amortization Expense-Patents B. IS 210 Accounts Payable 535 Insurance Expense C. Is 211 Salaries Payable 536 Supplies Expense 213 Sales Tax Payable 539 Miscellaneous Expense 214 Interest Payable 710 Interest Expense 215 Notes Payable 720 Loss on Sale of Vehicles 721 Loss on Sale of Equipment EQUITY 722 Loss on Sale of Timber Rights 310 Common Stock 723 Loss from Impaired Goodwill 311 Retained Earnings 312 Dividends
Journal
2. Journalize the transactions and the adjusting entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal.
a. Timber rights on a tract of land were purchased for $1,762.820 on February 22. The stand of timber is estimated at 4,639,000 board feet. During the current year, 1,068.200 board feet of timber were cut and sold.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
Adjusting Entries
1
2
December 31, the company determined that $4,015,000 of goodwill was impaired.
PAGE 2
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
Adjusting Entries
1
2
3
C. Governmental and legal costs of $6,846,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for three-fourths of a year.
PAGE 3
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
Adjusting Entries
1
2
Transcribed Image Text:Journal 2. Journalize the transactions and the adjusting entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal. a. Timber rights on a tract of land were purchased for $1,762.820 on February 22. The stand of timber is estimated at 4,639,000 board feet. During the current year, 1,068.200 board feet of timber were cut and sold. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Adjusting Entries 1 2 December 31, the company determined that $4,015,000 of goodwill was impaired. PAGE 2 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Adjusting Entries 1 2 3 C. Governmental and legal costs of $6,846,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for three-fourths of a year. PAGE 3 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Adjusting Entries 1 2
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