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Week 3 1 Brainiac Company purchased a delivery truck for

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Week 3 1 Brainiac Company purchased a delivery truck for Powered By Docstoc
					1.) Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011.The truck
    has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its
    estimated
    useful life of 8 years.Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
    Instructions
    (a) Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the
    units-of-activity method, and (3) the double-declining balance method.
    (b) Assume that Brainiac uses the straight-line method.
    (1) Prepare the journal entry to record 2011 depreciation.
    (2) Show how the truck would be reported in the December 31, 2011, balance sheet.



2.) Don Walls’s gross earnings for the week were $1,780, his federal income tax withholding
    was $301.63, and his FICA total was $135.73.

   Instructions
   (a) What was Walls’s net pay for the week?
   (b) Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries
   Payable; not Cash.)
   (c) Record the issuing of the check for Walls’s pay in the general journal.


3.) On January 1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is
    payable semiannually on July 1 and January 1.

   Instructions
   Present journal entries to record the following.
   (a) The issuance of the bonds.
   (b) The payment of interest on July 1, assuming that interest was not accrued on June 30.
   (c) The accrual of interest on December 31.



4.) On January 1, Flory Company issued $300,000, 8%, 5-year bonds at face value.
    Interest is payable semiannually on July 1 and January 1.

   Instructions
   Prepare journal entries to record the following events.
   (a) The issuance of the bonds.
   (b) The payment of interest on July 1, assuming no previous accrual of interest.
   (c) The accrual of interest on December 31.
5.) Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to
    finance the construction of a building at December 31, 2011. The terms provide for semiannual
    installment payments of $20,000 on June 30 and December 31.

   Instructions
   Prepare the journal entries to record the mortgage loan and the first two installment payments.



6.) Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for
    $562,613.This price resulted in an effective-interest rate of 10% on the bonds. Interest is
    payable
    semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize
    bond premium or discount.

   Instructions
   Prepare the journal entries to record the following. (Round to the nearest dollar.)
   (a) The issuance of the bonds.
   (b) The payment of interest and the discount amortization on July 1, 2011, assuming that
   interest was not accrued on June 30.
   (c) The accrual of interest and the discount amortization on December 31, 2011.

   Side note:       Prepare entries for issuance of
   bonds, payment of interest, and
   amortization of discount using
   effective-interest method.

				
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posted:5/12/2012
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