Question

McNally Corporation reported various transactions in 20X2:
a. Equipment with an original cost of $ 65,000 and accumulated depreciation of $ 52,000 was deemed unusable and was sold for $ 500 scrap value.
b. A new machine was acquired for $ 75,700. The invoice was marked 2/ 10, n/ 30, but McNally did not pay in time to take advantage of the 2% discount for early payment and thus paid the gross amount of $ 75,700. Wiring was improved to accommodate the needs of the new machinery at a cost of $ 500. Related software to install in the machine required for operation was purchased for $ 3,000. Installation and testing of the new machinery cost $ 2,500.
c. Regular machine maintenance was carried out for $ 22,000.
d. A major overhaul was done on heavy machinery for a cost of $ 75,000. This overhaul is expected to be completed every Five years.
e. he building roof was replaced during the period at a cost of $ 44,800 to improve the insulation in the building and save on heating costs. The old roof had an original cost of $ 20,400 and was three- quarters depreciated.
f. Two machines were acquired for a lump- sum amount of $ 53,800. One machine had an appraised value of $ 40,000 and the other, $ 20,000.
g. Land and building were acquired from a member of the Board of Directors in exchange for 325,000 of the company’s own common shares. The land was appraised at $ 75,000 and the building, $ 400,000. The facility will be used for long- term storage. The market value of common shares has been around $ 1.25 per share this year, with weekly highs and lows ranging from $ 1.80 to $ 0.95, respectively.
h. he company spent $ 630,000 in a research lab program this year. It was successful in developing three new commercial projects, which represented $ 244,000 of the expenditures budget. Legal fees associated with the three successful projects amount to $ 55,000.
i. McNally paved its factory parking lot, previously a dirt lot, at a cost of $ 160,100.

Required:
Prepare journal entries to record the transactions listed above. State any assumptions made.



$1.99
Sales3
Views86
Comments0
  • CreatedFebruary 17, 2015
  • Files Included
Post your question
5000