Question: La Mancha Enterprises completed all of its March 31 2014

La Mancha Enterprises completed all of its March 31, 2014, adjustments in preparation for compiling its financial statements, which resulted in the following trial balance.
Account...................Balance
Accounts payable .......................................................... $14,750
Accounts receivable......................................................... 57,500
Accumulated depreciation, computer equipment .......... 40,250
Accumulated depreciation, machinery.......................... 152,500
Accumulated depreciation, warehouse ......................... 286,500
Allowance for doubtful accounts...................................... 6,000
Cash ................................................................................. 35,000
Computer equipment ....................................................... 72,500
Expenses, including cost of goods sold....................... 1,246,750
Joy La Mancha, capital................................................... 407,875
Land................................................................................. 145,000
Machinery ...................................................................... 241,250
Mortgage payable ............................................................. 93,750
Office supplies..................................................................... 4,875
Revenues........................................................................ 1,227,500
Salaries payable.................................................................. 33,750
Warehouse........................................................................ 460,000

Other information:
1. All accounts have normal balances.
2. $34,200 of the mortgage balance is due beyond March 31, 2015.
The final task in the year-end process was to assess the assets for impairment, which resulted in the following schedule.
Asset.............Recoverable Value
Computer equipment ........................................... $6,250
Land........................................................................ 172,500
Machinery ............................................................... 65,000
Warehouse ............................................................ 243,750

Required
1. Prepare the entry (entries) to record any impairment losses at March 31, 2014. Assume the company recorded no impairment losses in previous years.
2. Prepare a classified balance sheet at March 31, 2014.
Analysis Component: How does the recording of an impairment loss affect equity, if at all?


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  • CreatedJanuary 08, 2015
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