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For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category.
a. Recorded $200 of depreciation expense.
b. Sold land that had originally cost $8,000 for $13,000 in cash.
d. Recorded the first annual payment of $2,800 for the leased machine (in part c).
e. Recorded a $6,500 payment for the cost of developing and registering a trademark.
f. Recognized periodic amortization for the trademark (in part e) using a 48-year useful life.
g. Sold used production equipment for $18,000 in cash. The equipment originally cost $50,000, and the accumulated depreciation account has an unadjusted balance of $23,300. It was determined that a $1,500 year-to-date depreciation entry must be recorded before the sale transaction can be recorded. Record the adjustment and the sale.© BrainMass Inc. brainmass.com October 25, 2018, 9:03 am ad1c9bdddf
The solution indicates the effect of the transaction or adjustment on assets, liabilities, and net income with given information.
Indicate effect of transactions on assets, liabilities, and net income
Prepare one sheet with the column headings as below. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount, and indicating whether it is an addition, (+) or a subtraction (-).
Assets Liabilities Net Income
Recorded $200 Accumulated Depreciation
of depreciation Depreciation Expense
expense -200 -200
B. Sold land that had originally cost $13,000 for $11,400 in cash.
C. Recorded a $68,000 payment for the cost of developing and registering a patent.
D. Recognized periodic amortization for the patent (in c above) using the maximum statutory useful life.
E. Capitalized $3,200 of cash expenditures made to extend the useful life of production equipment.
F. Expensed $1,800 of cash expenditures incurred for routine maintenance of production equipment.
G. Sold a used machine for $9,000 in cash. The machine originally cost $30,000 and had been depreciated for the first two years of its five-year useful life using the double-declining-balance method. Compute the balance of the accumulated depreciation account before you can record the sale.
H. Purchased a business for $320,000 in cash. The fair market values of the net assets acquired were as follows: Land, $40,000; Buildings, $200,000; Equipment, $100,000; and Long-Term Debt, $70,000.
I. Recognized periodic amortization of goodwill from the purchase transaction (in h above) using a 40-year useful life.View Full Posting Details