You are called in to make an examination of the CALEB Company as of December 1,...
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You are called in to make an examination of the CALEB Company as of December 1, 2015. The Company has been in existence for 6 years and has not been audited before. The books have not been closed. There is only one Machinery account as shown below. The bookkeeper tells you that he has been using a SLM depreciation rate of 20% per year, which was suggested by the manufacturers of the machines. The company policy is to depreciate the machine for the full year's rate in the year of acquisition and none in the year of derecognition. MACHINERY Date 01/04/11 Machine 1 Description Ref Debit Credit VR 1 P 15,000 07/02/11 Machine 2 VR 21 20,000 12/31/11 Depreciation GJ P 7,000 04/01/12 Machine 3 VR 29 60,000 12/31/12 Depreciation GJ 19,000 07/01/13 Machine 4 (Machine 1 traded in; allowance, P10,000, net) VR 38 55,000 12/01/13 Repairs to machine 3 VR 42 1,000 12/31/13 Depreciation GJ 27,200 06/12/14 Major overhaul of Machine ? VR 48 8,000 07/01/14 Automatic control put on machine 4 VR 51 18,000 10/01/14 Soldmachine 3 CR 5,000 12/31/14 Depreciation GJ 20,400 12/31/14 Depreciation 20,400 07/01/15 Sold Machine 4 CR 14,000 12/31/15 Depreciation GJ 5,800 The fair market value of machine 2 is P10,000 while it value in use is equal to its book value. Required: 1. Compute for the following: a. Gain or loss on trade-in of Machine 1 b. Gain or loss on sale of machine 3 c. Gain or loss on sale machine 4 d. Net book value of machine 2 as of December 31,2015 e. Adjusted balance of the machinery account as of December 31,2015 2. Adjusting Journal Entries You are called in to make an examination of the CALEB Company as of December 1, 2015. The Company has been in existence for 6 years and has not been audited before. The books have not been closed. There is only one Machinery account as shown below. The bookkeeper tells you that he has been using a SLM depreciation rate of 20% per year, which was suggested by the manufacturers of the machines. The company policy is to depreciate the machine for the full year's rate in the year of acquisition and none in the year of derecognition. MACHINERY Date 01/04/11 Machine 1 Description Ref Debit Credit VR 1 P 15,000 07/02/11 Machine 2 VR 21 20,000 12/31/11 Depreciation GJ P 7,000 04/01/12 Machine 3 VR 29 60,000 12/31/12 Depreciation GJ 19,000 07/01/13 Machine 4 (Machine 1 traded in; allowance, P10,000, net) VR 38 55,000 12/01/13 Repairs to machine 3 VR 42 1,000 12/31/13 Depreciation GJ 27,200 06/12/14 Major overhaul of Machine ? VR 48 8,000 07/01/14 Automatic control put on machine 4 VR 51 18,000 10/01/14 Soldmachine 3 CR 5,000 12/31/14 Depreciation GJ 20,400 12/31/14 Depreciation 20,400 07/01/15 Sold Machine 4 CR 14,000 12/31/15 Depreciation GJ 5,800 The fair market value of machine 2 is P10,000 while it value in use is equal to its book value. Required: 1. Compute for the following: a. Gain or loss on trade-in of Machine 1 b. Gain or loss on sale of machine 3 c. Gain or loss on sale machine 4 d. Net book value of machine 2 as of December 31,2015 e. Adjusted balance of the machinery account as of December 31,2015 2. Adjusting Journal Entries
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To compute the required figures lets analyze each transaction 1 Gain or loss on tradein of Machine 1 ... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
Posted Date:
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