Shamrock Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Shamrock traded...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Shamrock Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Shamrock traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: List price of new freezer $22,410 Cash paid 14,904 Cost of old machine (4-year life, $1,620 salvage value) 18,900 Accumulated depreciation-old machine (straight-line) 8,640 Secondhand fair value of old machine 7,236 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Shamrock's fiscal year ends on December 31, and Shamrock recorded depreciation on the old machine through September 30, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Exchange has commercial substance: Depreciation Expense 13871 Accumulated Depreciation-Machinery 13871 (To record current depreciation) Accumulated Depreciation-Machinery 22511 Machinery 22140 Cash 14904 Machinery 18900 Gain on Disposal of Machinery 10847 (To record exchange of the machine) (b) Exchange lacks commercial substance: Depreciation Expense 13871 Accumulated Depreciation-Machinery 13871 (To record current depreciation) Machinery Accumulated Depreciation-Machinery 22511 Machinery 18900 Cash 14904 Gain on Disposal of Machinery (To record exchange of the machine) Shamrock Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Shamrock traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: List price of new freezer $22,410 Cash paid 14,904 Cost of old machine (4-year life, $1,620 salvage value) 18,900 Accumulated depreciation-old machine (straight-line) 8,640 Secondhand fair value of old machine 7,236 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Shamrock's fiscal year ends on December 31, and Shamrock recorded depreciation on the old machine through September 30, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Exchange has commercial substance: Depreciation Expense 13871 Accumulated Depreciation-Machinery 13871 (To record current depreciation) Accumulated Depreciation-Machinery 22511 Machinery 22140 Cash 14904 Machinery 18900 Gain on Disposal of Machinery 10847 (To record exchange of the machine) (b) Exchange lacks commercial substance: Depreciation Expense 13871 Accumulated Depreciation-Machinery 13871 (To record current depreciation) Machinery Accumulated Depreciation-Machinery 22511 Machinery 18900 Cash 14904 Gain on Disposal of Machinery (To record exchange of the machine)
Expert Answer:
Answer rating: 100% (QA)
Answer a If the transaction has a commercial substance than the transaction are to be recorded as th... View the full answer
Related Book For
Horngrens Accounting
ISBN: 978-0133855388
10th Canadian edition Volume 2
Authors: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo-Ann L. Johnston, Peter R. Norwood
Posted Date:
Students also viewed these accounting questions
-
Prepare the journal entries necessary to record Dao Companys following stock transactions during 2014: Oct. 1 Purchased 2,000 shares of its own $2 par value common stock for $20 per share, the...
-
Prepare the journal entries necessary to record the following transactions and economic events for Magnetawan Ltd. (Magnetawan): a. During 2018, Magnetawan had cash sales of $175,000 and credit sales...
-
Prepare the general journal entries necessary to record the following selected transactions of the General Fund of the City of Roxyville. 1. Property taxes of $ 4,000,000 were levied. The city...
-
You are considering a job offer. The job offers an annual salary of $42,000, $45,000, and $48,000 a year for the next three years, respectively. The offer also includes a starting bonus of $1,000...
-
Define research. How is it valuable to a forensic accountant?
-
Kilian Group Ltd., a public company following IFRS, is performing an assessment as to whether or not goodwill is impaired. The majority of the goodwill was recorded following a merger in the previous...
-
A three-bladed helicopter blade rotates at \(200 \mathrm{rpm}\). If each blade is \(12 \mathrm{ft}\) long and \(1.5 \mathrm{ft}\) wide, estimate the torque needed to overcome the friction on the...
-
B. S. International, Ltd. (BSI), makes costume jewelry. JMAM, LLC, is a wholesaler of costume jewelry. JMAM sent BSI a letter with the terms for orders, including the necessary procedure for...
-
1.How have we manipulated electricity to get us to this point of target interactions? 2.Describe a bremsstrahlung target interaction. 3.Describe a characteristic target interaction. 4.The majority of...
-
Pequity Company purchased 85% of the common stock of Sequity Company on April 1, Year 1 for total consideration of $545,000 cash plus $50,000 of contingent consideration as measured according to GAAP...
-
System flowcharts can be used to describe Responses manual accounting systems. manual accounting systems. computerized accounting systems. computerized accounting systems. no accounting systems. no...
-
The grocery store, Wow Munchies, from an earlier chapter is considering developing an online site for customers to purchase food. The owner of the store believes that this capability will enable the...
-
On 1 January 2017, Nicolaidis Ltd purchased two identical new machines at a total cost of $700 000. It was estimated that the machines would have a useful life of 10 years and a residual value of $50...
-
You are designing a data interface screen for a new system that is under development. The purpose of this data interface screen is to enter changes of address submitted by drivers to their states...
-
Over a 5year period, Downton Ltd completed the following transactions affecting noncurrent assets in financial years ending 31 December. The company uses straightline depreciation on all depreciable...
-
You are a systems designer in an organization. One of the other designers on your team has recently retired. Your manager comes to you and asks you to sit in on the interviews to fi nd a replacement....
-
13How do you know a field is a measure when selecting from the Field List of a PivotTable? a)Measures are listed all together in the Field List. b)They are listed in bold in the field list. c)The are...
-
Find the image of x = k = const under w = 1/z. Use formulas similar to those in Example 1. y| y = 0 -21 -2 -1 -1, /1 12 T -1 -1 y= -2 x =0
-
How should issuance of a note payable to purchase land be reported in the financial statements? Identify three other transactions that fall into this same category.
-
The shareholders' equity for King Paving Inc. on June 30, 2017 (end of the company's fiscal year), follows: Common shares, 800,000 shares authorized, 80,000 shares issued and outstanding...
-
Canadian Tire Corporation, Limited's cash flow statement for the years ended December 28, 2013, and December 29, 2012, is reproduced below: Adapted from the Canadian Tire Annual Report 2013....
-
In Fig. 1130, there is no explicit invariant that states that a Transaction cannot be linked to movements that are linked to the same account, because the structure of the model already demands is....
-
Apply the Account/Transaction pattern to the parallel financial transactions of the example shown in Figs. 1131 to 1135. As the bills may be paid forward, it may be necessary to use memo entries....
-
Look at Fig. 1119 and create a new discount strategy that gives a percentage of discount for sales with more than a certain number of products. Order | < > < > +nr: Natural = < > +date: Date...
Study smarter with the SolutionInn App