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    Journal entries and balance sheet representation

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    (See attached file for full problem description)

    ---
    Melanie Griffith Company closes its books monthly. On September 30, selected ledger account balances are:

    Notes Receivable $28,000
    Interest Receivable $ 216

    Notes receivable include the following.
    Date Maker Face Term Interest
    Aug. 16 Foran Inc. $ 8,000 60 days 12%
    Aug. 25 Drexler Co. 8,000 60 days 12%
    Sept 30 Sego Corp. 12,000 6 months 9%

    Interest is computed using a 360-day year. During October, the following transactions were completed.

    Oct. 7 Made sales of $6,900 on Melanie Griffith credit cards.
    12 Made sales of $750 on MasterCard credit cards. The credit card service charge is
    4%.
    15 Added $485 to Melanie Griffith customer balance for finance charges on unpaid
    balances.
    15 Received payment in full from Foran Inc. on the amount due.
    24 Received notice that Drexler note has been dishonored. (Assume that Drexler is
    expected to pay in the future.)

    Instructions
    (a) Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
    (b) Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts.
    (c) Show the balance sheet presentation of the receivable accounts at October
    31.

    Page #2

    In recent years, Letterman Company purchased three machines. Because of heavy
    turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods were selected. Information concerning the machines is summarized below.

    Machine
    Acquired
    Cost Salvage
    Value Useful Life
    In Years Depreciation Method

    1
    1/1/99
    $96,000
    $ 6,000
    10
    Straight-line
    2 1/1/00 60,000 10,000 8 Declining-balance
    3 11/1/02 66,000 6,000 6 Units-of-activity

    For the declining-balance method, the company uses the double-declining rate. For the units-of- activity method, total machine hours are expected to be 24,000. Actual hours of use in the first 3 years were: 2002, 1,000; 2003, 4,500; and 2004, 5,000.

    Instructions
    (a) Compute the amount of accumulated depreciation on each machine at December 31, 2002.
    (b) If machine 2 had been purchased on April 1 instead of January 1, what would be the depreciation expense for this machine in (1) 2000 and (2) 2001?

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    https://brainmass.com/business/financial-statements/77550

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    Solution Summary

    MS word document contains journal entries for accrued interest ,balance sheet representation of the receivable accounts and calculation of depreciation.

    $2.19