Question

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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