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    Journal entry, depreciation, equity and cashflows

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    Please assist me with sections 3 (journal entry), 4 (depreciation), 6 (equity) and 7 (cashflows) in the attached document.

    SECTION III - JOURNAL ENTRIES

    Ex. 135
    Prepare journal entries to record the following transactions entered into by Elway Company:

    2006
    June 1 Received a $25,000, 12%, 1-year note from Ann Holt as full payment on her account.

    Nov. 1 Sold merchandise on account to Orson, Inc. for $10,000, terms 2/10, n/30.

    Nov. 5 Orson, Inc. returned merchandise worth $500.

    Nov. 9 Received payment in full from Orson, Inc.

    Dec. 31 Accrued interest on Holt's note.

    2007
    June 1 Ann Holt honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2007.

    SECTION IV - DEPRECIATION

    Southeast Airlines purchased a 747 aircraft on January 1, 2006, at a cost of $30,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $4,000,000. On January 1, 2009 the airline revises the total estimated useful life to 15 years with a revised salvage value of $3,000,000.

    Instructions
    (a) Compute the accumulated depreciation and book value at December 31, 2008 using the straight-line method and the double-declining-balance method.
    (b) Assuming the straight-line method is used, compute the depreciation expense for the year ended December 31, 2009.

    SECTION VI - EQUITY

    The following items were shown on the balance sheet of Kuebel Corporation on December 31, 2005:

    Stockholders' Equity
    Paid-In Capital
    Capital Stock
    Common stock, $10 par value, 300,000 shares
    authorized; ______ shares issued and ______ outstanding $1,000,000

    Additional paid-in capital
    In excess of par value 2,010,000
    Total paid-in capital 3,010,000

    Retained Earnings 960,000
    Total paid-in capital and retained earnings 3,970,000
    Less: Treasury stock (7,000 shares) (84,000)
    Total stockholders' equity $3,886,000

    Instructions
    Complete the following statements and show your computations.
    (a) The number of shares of common stock issued was _______________.
    (b) The number of shares of common stock outstanding was ____________.
    (c) The sales price of the common stock when issued was $____________.
    (d) The cost per share of the treasury stock was $_______________.
    (e) The average issue price of the common stock was $______________.

    SECTION VII - CASH FLOWS
    A comparative balance sheet for Isaac Corporation is presented below:

    ISAAC CORPORATION
    Comparative Balance Sheet
    2005 2004
    Assets
    Cash $ 39,000 $ 31,000
    Accounts receivable (net) 80,000 60,000
    Prepaid insurance 22,000 17,000
    Land 18,000 40,000
    Equipment 70,000 60,000
    Accumulated depreciation (20,000) (13,000)
    Total Assets $209,000 $195,000

    Liabilities and Stockholders' Equity
    Accounts payable $ 11,000 $ 6,000
    Bonds payable 27,000 19,000
    Common stock 140,000 115,000
    Retained earnings 31,000 55,000
    Total liabilities and
    stockholders' equity $209,000 $195,000

    Additional information:
    1. Net loss for 2005 is $20,000.
    2. Cash dividends of $4,000 were declared and paid in 2005.
    3. Land was sold for cash at a loss of $10,000. This was the only land transaction during the year.
    4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
    5. $12,000 of bonds were retired during the year at carrying (book) value.
    6. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was $25,000.

    Instructions
    Prepare a statement of cash flows for the year ended 2005, using the indirect method.

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    SECTION III - JOURNAL ENTRIES

    Ex. 135
    Prepare journal entries to record the following transactions entered into by Elway Company:

    2006
    June 1 Received a $25,000, 12%, 1-year note from Ann Holt as full payment on her account.

    June 1 Notes Receivable 25,000
    Accounts Receivable 25,000

    Nov. 1 Sold merchandise on account to Orson, Inc. for $10,000, terms 2/10, n/30.

    Nov. 1 Accounts Receivable 10,000
    Sales 10,000

    Nov. 5 Orson, Inc. returned merchandise worth $500.

    Nov. 5 Merchandise 500
    Accounts Receivable 500

    Nov. 9 Received payment in full from Orson, Inc.

    Nov. 9 Cash 9,310
    Sales discount 190
    Accounts Receivable 9,500
    (10,000 - 500 = 9,500 x 0.02 = 190)

    Dec. 31 Accrued interest on Holt's note.

    Dec. 31 Interest Receivable 1,750
    Interest Revenue 1,750
    (25,000 x 12% x 7/12 = 1,750)

    2007
    June 1 Ann Holt honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2007.

    June 1 Cash 28,000
    Notes Receivable 25,000
    Interest Receivable 1,750
    Interest Revenue 1,250

    SECTION IV - DEPRECIATION

    Southeast Airlines purchased a 747 aircraft on January 1, 2006, at a cost of $30,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $4,000,000. On January 1, 2009 the airline revises the total estimated useful life to 15 years with a revised salvage value of $3,000,000.

    Instructions
    (a) Compute the accumulated depreciation and book value at ...

    Solution Summary

    This solution is comprised of a detailed explanation to assist me with sections 3 (journal entry), 4 (depreciation), 6 (equity) and 7 (cashflows) in the attached document.

    $2.19

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