Reference no: EM132508952

Each transaction must be recorded on a journal entry sheet with a reference number, date, and explanation (in good form).

Question 1: Use 12/31/2016 as the end of the year to post any required adjusting entries on 12/31/2016 Assume that this company is on a 12 month calendar year. In most of the scenarios the transaction is described and you must determine all of the appropriate journal entries to record the transactions and any subsequent adjusting entries (for example, depreciation expense on 12/31/2016).

a. Purchased new equipment for $50,000 by paying cash on Oct 1. This equipment will have an 8 year useful life, an estimated residual value of 8,000.

b. Purchased $4,000 of equipment on July1, paying $500 in cash and owing the rest on accounts payable to the supplier. The equipment will be depreciated using the double declining balance method have a useful life of 4 years. It is estimated to have a 500 residual value.

c. On Sept 1 paid the supplier of equipment purchased on July 1 the remaining balance.

d. Due to expansion the Company bought a new building and land on Oct 1 for $300,000 with cash. The land is valued at 100,000 and the building at 200,000. The building will be depreciated using the straight line depreciation method. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years.

e. On December 31 the Company determined that a fixed asset with a Net Book Value of $20,000 was impaired and needed to be adjusted. The fair value of the asset was determined to be $8,000 based on a future cash flow analysis that determined it could general $9,000 in cash for it's remaining life.