Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 13QS
1.
To determine
Prepare the
2.
To determine
Prepare the year-end
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1 of this year, Diaz Boutique pays $105,000 to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Diaz leases (does not own) its store and has eight years remaining on the lease. Prepare the entry to record (1) the cost of modernization and (2) amortization at the end of this current year.
On January 1 of this year, Diaz Boutique pays $170,000 to modernize its store. Improvements include new floors, ceilings, wiring, and
wall coverings. These improvements are estimated to yield benefits for 8 years. Diaz leases (does not own) its store and has 5 years
remaining on the lease.
1. & 2. Prepare the journal entry to record the cost of modernization and amortization at the end of this current year.
View transaction list
Journal entry worksheet
1
2
Record the cost of modernization of the store for $170,000 cash.
Note: Enter debits before credits.
Date
January 01
General Journal
Debit
Credit
On January 1 of this year, a company pays $165,000 cash to modernize its store with new flooring, internet wiring, and wall fixtures.
These improvements are estimated to yield benefits for 10 years. The company leases (does not own) its store and has 8 years
remaining on the lease.
1. & 2. Prepare the entry to record its cash payment for the leasehold improvements and the December 31 year-end entry to amortize
the leasehold improvements.
View transaction list
Journal entry worksheet
1
2
Record the cost of modernization of the store for $165,000 cash.
Note: Enter debits before credits.
Date
January
01
General Journal
Debit
Credit
>
Chapter 10 Solutions
Principles of Financial Accounting.
Ch. 10 - A company paid 326,000 for property that included...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQ
Ch. 10 - Why is the Modified Accelerated Cost Recovery...Ch. 10 - Prob. 7DQCh. 10 - Identify events that might lead to disposal of a...Ch. 10 - Prob. 9DQCh. 10 - Is the declining-balance method an acceptable way...Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - APPLE On its recent balance sheet in Appendix A,...Ch. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Prob. 19DQCh. 10 - Prob. 20DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - On January 1, the Matthews Band pays 65,800 for...Ch. 10 - Prob. 8QSCh. 10 - Revenue and capital expenditures 1. Classify the...Ch. 10 - Disposal of assets Garcia Co. owns equipment that...Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Caleb Co. owns a machine that had cost 42,400 with...Ch. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - NewTech purchases computer equipment for 154,000...Ch. 10 - Double-declining-balance depreciation In early...Ch. 10 - Straight-line depreciation and income effects P1...Ch. 10 - Double-declining-balance depreciation P1 Tory...Ch. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Revising depreciation C2 Apex Fitness Club uses...Ch. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Montana Mining Co. pays 3,721,000 for an ore...Ch. 10 - Milano Gallery purchases the copyright on a...Ch. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Lok Co. reports net sales of 5,856,480 for Year 2...Ch. 10 - Prob. 23ECh. 10 - Prob. 24ECh. 10 - Prob. 1APCh. 10 - Prob. 2APCh. 10 - Prob. 3APCh. 10 - Prob. 4APCh. 10 - Yoshi Company completed the following transactions...Ch. 10 - Onslow Co. purchased a used machine for 178,000...Ch. 10 - On July 23 of the current year, Dakota Mining Co....Ch. 10 - On January 1, Falk Company signed a contract to...Ch. 10 - Nagy Company makes a lump-sum purchase of several...Ch. 10 - Prob. 2BPCh. 10 - Prob. 3BPCh. 10 - Prob. 4BPCh. 10 - Prob. 5BPCh. 10 - On January 1, Walker purchased a used machine for...Ch. 10 - Prob. 7BPCh. 10 - Prob. 8BPCh. 10 - Prob. 10SPCh. 10 - Prob. 1AACh. 10 - Prob. 2AACh. 10 - Prob. 3AACh. 10 - Prob. 1BTNCh. 10 - Prob. 5BTN
Knowledge Booster
Similar questions
- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.arrow_forwardOn March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?arrow_forwardOn January 1 of this year, Diaz Boutique pays $185,000 to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Diaz leases (does not own) its store and has 8 years remaining on the lease. 1. & 2. Prepare the journal entry to record the cost of modernization and amortization at the end of this current year. No 1 Date January 01 Leasehold improvements Cash 2 December 31 Answer is complete but not entirely correct. General Journal Debit 185,000 Credit 185,000 Amortization expense-Leasehold improvements Cash 30 185,000 185,000arrow_forward
- Inc. currently leases an office building. It initiated the original 23-year lease 17 years ago, so 6 years remain on the lease. On January 1, PP paid $28,500 to install a new heating and cooling system with a 12-year estimated useful life that it expects to use ratably over the remaining term of the lease. What is the journal entry to record the expenditure? How much amortization will PP report and for how many years? What is the journal entry for the first year?arrow_forwardNEW Co. leased an office and paid $20,000 for leasehold improvements in January of this year. This cost included drywall, new carpets, and all new lighting fixtures. The term of the lease is 2 years plus an option to renew for 2 more years. Required: Calculate the maximum CCA that NEW Co. will be allowed to deduct this year. (Show calculations and the process of arriving at your answer.)arrow_forwardCrestfield leases office space. On January 3, the company incurs $26,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 5 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?arrow_forward
- Blossom, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $25,000 from Crane Corporation. The agreement stipulates the following. Rental payments of $5,599 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Blossom must reimburse Crane each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Blossom must make a payment of $500 with the rental payment each period to cover the insurance Crane has on the warehouse. Blossom paid legal fees of $1,000 in executing the lease. Assuming Blossom's incremental borrowing rate is 6% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Blossom. (List all debit entries before credit entries. Credit account titles are automatically indented when the…arrow_forwardOn January 1 of this year, Diaz Boutique pays $130,000 to modernize its store. Improvements Include new floors, cellings. wiring, and wall coverings. These Improvements are estimated to yleld benefits for 8 years. Dlaz leases (does not own) Its store and has 5 years remalning on the lease. 1. & 2. Prepare the Journal entry to record the cost of modernization and amortization at the end of this current year. Vlew trannaction lst Journal entry worksheet Record the cost of modemization of the store for $130,000 cash. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01 Record entry Clear entry Vlew general Journalarrow_forwardForrest, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $20,000 from United Corporation. The agreement stipulates the following. Rental payments of $4,638 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Forrest must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Forrest must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Forrest paid legal fees of $1,000 in executing the lease. Assuming Forrest's incremental borrowing rate is 8% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Forrest.arrow_forward
- Miriam Corp. began leasing retail space at Oberlin Village in Raleigh, NC, on December 1, 2022. Before opening its new store, Miriam spent $7,000 on special lighting for the store. The lease term is ten (10) years, and the special lighting has an economic life of five (5) years. Which statement shows the correct accounting treatment for the new lighting in 2022? Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over the lease term of ten (10) years. Miriam should debit its “Repairs and Maintenance Expense” account by $7,000. Miriam should debit its “Cost of Goods Sold” account by $7,000. Miriam should debit its “Leasehold Improvements” account for $7,000 but should not depreciate the lighting. Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over its economic life of five (5) years.arrow_forwardWindsor, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $41,000 from United Corporation. The agreement stipulates the following. . Rental payments of $9,994 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Windsor must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. Windsor must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Windsor paid legal fees of $2,500 in executing the lease. Assuming Windsor's incremental borrowing rate is 11% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Windsor.arrow_forwardIvanhoe Company specializes in leasing large storage units to other businesses. Ivanhoe entered a contract to lease a storage unit to Cullumber, Inc. for 4 years when that particular storage unit had a remaining useful life of 5 years. The fair value of the unit was $32,000 at the commencement of the lease on January 1, 2025. The present value of the five equal rental payments of $8,250 at the start of each year, plus the present value of a guaranteed residual value of $1,000, equals the fair value of $32,000, Ivanhoe's implicit rate of return on the lease of 4%. The following is a correct, complete amortization schedule created by Ivanhoe. Date 1/1/25 1/1/25 1/1/26 1/1/27 1/1/28 12/31/28 Lease Payment $8,250 8,250 8,250 8,250 1,000 $34,000 Interest (4%) on Outstanding Lease Receivable (To record accrual of interest) $950 658 354 38 $2,000 Reduction of Lease Receivable $8,250 7,300 7,592 7,896 962 $32,000 Balance of Lease Receivable $32,000 23,750 16,450 8,858 962 0 Given the above…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College