01 Jul ACC 206 Strayer Week 5 University Riverbed Company Accounting Assignment

Question Description

Brief Exercise 10-02

Riverbed Company incurs the following expenditures in purchasing a truck: cash price $53,000, accident insurance $4,500, sales taxes $2,900, motor vehicle license $100, and painting and lettering $400. What is the cost of the truck?
Cost of the truck $

Brief Exercise 10-08

On January 1, 2020, the Whispering Winds Company ledger shows Equipment $68,000 and Accumulated Depreciation―Equipment $9,700. The depreciation resulted from using the straight-line method with a useful life of 12 years and salvage value of $2,100. On this date, the company concludes that the equipment has a remaining useful life of only 5 years with the same salvage value.

Compute the revised annual depreciation.

Revised annual depreciation $

Brief Exercise 10-11 a1-b (Part Level Submission)

Whispering Winds Mining Co. purchased for $9,140,000 a mine that is estimated to have 36,560,000 tons of ore and no salvage value. In the first year, 13,140,000 tons of ore are extracted.

(a1)

Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.)

Depletion cost per unit $
per ton

(a2)

Prepare the journal entry to record depletion for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit

Credit

(b)

Show how this mine is reported on the balance sheet at the end of the first year.

Whispering Winds Mining Co.
Balance Sheet (Partial)

$

:

$

Exercise 10-08 a-b (Part Level Submission) (Video)

Terry Wade, the new controller of Flint Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2020. His findings are as follows.

Date
Accumulated
Depreciation

Useful life
in Years

Salvage Value

Type of Asset

Acquired

Cost

1/1/20

Old

Proposed

Old

Proposed

Building 1/1/14 $821,000 $116,700 40 50 $43,000 $57,500
Warehouse 1/1/15 115,000 22,180 25 20 4,100 20,820

All assets are depreciated by the straight-line method. Flint Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Terry’s proposed changes.

(a)

Compute the revised annual depreciation on each asset in 2020.

Building
Warehouse

Revised annual depreciation $

$

(b)

Prepare the entry to record depreciation on the building in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date
Account Titles and Explanation

Debit

Credit

Dec. 31

Exercise 10-09

Presented below are selected transactions at Pronghorn Company for 2020.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $60,700 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2017. The computer cost $41,600. It had a useful life of 5 years with no salvage value. The computer was sold for $13,600.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $42,660. It was depreciated based on a 6-year useful life with a $3,000 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Pronghorn Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation

Debit

Credit

(To record depreciation to date of disposal)

(To record sale of computer)

(To record depreciation to date of disposal)

Dec. 31

(To record retirement of truck)

Exercise 10-13 a1-a2 (Part Level Submission) (Video)

Pronghorn Company, organized in 2020, has the following transactions related to intangible assets.

1/2/20 Purchased patent (8-year life) $592,000
4/1/20 Goodwill purchased (indefinite life) 360,000
7/1/20 13-year franchise 520,000
9/1/20 Research and development costs 178,000

(a1)

Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2020, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date
Account Titles and Explanation

Debit

Credit

(a2)

Calculate ending balances as at 12/31/20.

Ending balances
Patents $

Goodwill $

Franchises $

Research and Development Expense $

Problem 10-03A a-c (Part Level Submission)

On January 1, 2020, Riverbed Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $52,000. Related expenditures included: sales tax $1,900, shipping costs $200, insurance during shipping $60, installation and testing costs $90, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Riverbed estimates that the useful life of the machine is 5 years with a $5,200 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Riverbed estimates that the useful life of the machine is 4 years with a $9,900 salvage value remaining at the end of that time period.

(a)

Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

1. The journal entry to record its purchase on January 1, 2020.
2.

The journal entry to record annual depreciation at December 31, 2020.
No.

Account Titles and Explanation

Debit

Credit

1.

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

2.

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

(b)

Calculate the amount of depreciation expense that Riverbed should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.)

(1) Riverbed uses the straight-line method of depreciation.
(2) Riverbed uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Riverbed uses the units-of-activity method and estimates that the useful life of the machine is 113,400 units. Actual usage is as follows: 2020, 45,000 units; 2021, 33,000 units; 2022, 21,000 units; 2023, 14,400 units.
Depreciation Expense
2020

2021

2022

2023

Straight-line method

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

Declining-balance method

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

Units-of-activity method

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

$enter a debit amount rounded to 0 decimal places

(c)

Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2020)?
select a method with the highest amount of depreciation expense in 2020

The highest amount in year 4 (2023)?
select a method with the highest amount of depreciation expense in 2023

The highest total amount over the 4-year period?
select a method with the highest total amount over the 4-year period