Exercise 6.19
LO 6, 8, 9
Transaction analysis—various accounts Prepare
an answer sheet with the column headings that follow. For each of
the following transactions or adjustments, indicate the effect of
the transaction or adjustment on assets, liabilities, and net
income by entering for each account affected the account name and
amount and indicating whether it is an addition (+) or a
subtraction (−). Transaction a has been done as an
illustration. Net income is not affected by every
transaction. In some cases, only one Page 219 column may be
affected because all of the specific accounts affected by the
transaction are included in that category.
a.
| Assets | Liabilities | Net Income | |
| Recorded $600 of depreciation expense. |
Accumulated Depreciation −600 |
Depreciation Expense −600 |
b.
Sold land that had originally cost $27,000 for $42,000 in
cash.
c.
Acquired a new machine under a capital lease. The present value
of future lease payments, discounted at 10%, was $36,000.
d.
Recorded the first annual payment of $6,000 for the leased
machine (in part c).
e.
Recorded a $18,000 payment for the cost of developing and
registering a trademark.
f.
Recognized periodic amortization for the trademark (in part
e) using a 40-year useful life.
g.
Sold used production equipment for $42,000 in cash. The
equipment originally cost $120,000, and the accumulated
depreciation account has an unadjusted balance of $66,000. It was
determined that a $3,000 year-to-date depreciation entry must be
recorded before the sale transaction can be recorded. Record the
adjustment and the sale.
(Marshall 218-219)
Marshall, David, Wayne McManus, Daniel
Viele. Accounting: What the Numbers Mean, 11th Edition.
McGraw-Hill Learning Solutions, 01/2016. VitalBook file.
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