31. Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 after they service their 4 year service life. Golden Sales managers want to evaluate the options of depreciation (10 points).
(a) Compute the annual straight-line depreciation and provide the depreciation journal entry to be posted at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the double declining balance method.
32. The units of an item available for sale during the year were as follows:
Jan. 1 Inventory 20 units at $50
Feb. 4 Purchase 10 units at $52
July 7 Purchase 30 units at $55
Oct. 15 Purchase 15 units at $60
There are 30 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the first-in, first-out costing method (6 points).
33. Using the following bank reconciliation for Allen Co. for June 30, 2007, record the appropriate journal entries that would be necessary (7 points).
Allen Co.
Bank Reconciliation
June 30, 2007
Cash balance according to bank statement $8,000.00
Add deposits in transit not recorded by bank 500.00
$8,500.00
Deduct outstanding checks 2,200.00
Adjusted balance $6,300.00
Cash balance according to depositor’s records $3,675.00
Add: Note collected by bank, including
$50 interest $2,850.00
Error in recording cash sales of
$342 as $324 18.00 2,868.00
$6,543.00
Deduct: NSF check from XXXXX XXXXX $ 218.00
Bank service charges 25.00 243.00
Adjusted balance $6,300.00
34. Wolfe Company issued a 60-day, 8% note for $15,000, dated April 5, to Lamb Company on account (9 points).
(a) Determine the due date of the note.
(b) Determine the maturity value of the note.
(c) Journalize the entries to record the following:
(1) receipt of the note by the payee, and
(2) receipt by the payee of the amount due on the note at maturity. Round answers to the nearest $1.
35. ABC Country Club has acquired a lot to construct a clubhouse. ABC had the following costs related to the construction:
Architects Fees $20,000
Construction Labor 80,000
Engineers Fees 15,000
Fences around building 9,000
Grading and leveling 10,000
Insurance costs incurred during construction 7,000
Interest on money borrowed for construction 5,000
Land 37,000
Building Materials 237,000
Sales Taxes 3,000
Trees and Shrubs 6,000
Determine the cost of the Club House to be reported on the balance sheet. Please be sure to list each of the items included in the cost to determine the cost of the Club House