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TitleNon Current Operating Assets
TagsBook Value Depreciation Expense Balance Sheet
File Size395.0 KB
Total Pages19
Document Text Contents
Page 9

Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS



Problem 13
(Ecstacy Company)


Adjusting Entries

Franchise 420,000
Prepaid Rent 280,000
Retained Earnings 160,000
Patents 740,000
Research and Development Expense (400,000+1,600,000) 2,000,000
Goodwill 2,784,000
Formula (or Patent) 350,000
Legal Fees 126,500
Intangible Assets 6,860,500

Retained Earnings (3/24 x 280,000) 35,000
Rent Expense (1/2 x 280,000) 140,000
Prepaid Rent 175,000

Retained Earnings (6/60 x 420,000) 42,000
Amortization Expense – Franchise 84,000
Accumulated Amortization – Franchise 126,000


Amortization Expense – Patents 61,667

Accumulated Amortization – Patents 61,667
740,000 /10 x 10/12



Problem 14
(Mandy Moore Corporation)

Adjusting Entries

Research and Development Expense 940,000
Patents 75,000
Rent Expense (91,000 x 5/7) 65,000
Prepaid Rent (91,000 – 65,000) 26,000
General and Administrative Expense / Share Premium * 36,000
Discount on Bonds Payable 84,000
Advertising and Promotions Expenses 207,000
Other Operating Expenses 241,000
Share Premium – Ordinary Share 250,000
Intangible Assets 1,424,000

* If there is no share premium from the same transaction/ If share premium results from the
same transaction.

Page 18

Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS







Purchases 60,000

Trade Payables 60,000



Doubtful Accounts Expense 162,364

Allowance for Doubtful Accounts 162,364



Inventory, end 2,693,200\

Cost of goods sold 5,887,200

Net Purchases 6,555,000

Inventory, beginning 2,025,400



Other Operating Income 86,400

Trading Securities – PS Bank 86,400



Trading Securities – SM 8,000

Gain on Sale of Trading Securities 8,000



Trading Securities – PS Bank 93,600

Trading Securities – SM 50,000

Unrealized Gains on Trading Securities 143,600



Equipment 14,600

Transportation Expense 3,600

Repairs and Maintenance 11,000



Depreciation and Amortization 1,825

Accumulated Depreciation – Equipment 1,825

14,600 / 8 = 1,825



Accumulated Depreciation – Leasehold Improvements 19,333

Depreciation and Amortization 19,333



Utilities Expense 44,400

Salaries Expense 26,350

Repairs and Maintenance 3,820

Trade Payables and Accrued Expenses 74,570



Interest Expense 12,205

Interest Payable 12,205



Other Operating Income 1,040,000

Additional Paid in Capital 1,000,000

Land 40,000



Retained Earnings 1,650,000

Dividends Payable 1,650,000



Income Tax Expense 142,354

Income Tax Payable 142,354

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