220ch5 8 solutions

8/3/2019 220Ch5 8 Solutions

1/31

Exercise 5-1 (30 minutes)

a. Specific identification

Ending inventory100 units from January 30, 80 units from January20, and 45 units from beginning inventory

Ending Cost ofComputations Inventory Goods

Sold

(100 x $5.00) + (80 x $6.00) + (45 x $7.00)...... . $1,295

$2,800 - $1,295..................................................$1,505


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b. Weighted average perpetual

Date Goods Purchased Cost of Goods Sold Inventory Balance

1/ 1 140 @ $7.000 = $ 980

1/10 90 @ $ 7.00 = $ 630 50 @ $7.000 = $ 350

1/20 220 @ $6.00 50 @ $7.000= $1,670

220 @ $6.000(avg. cost is $6.185)

1/25 145 @ $6.185 = $ 897* 125 @ $6.185 = $ 773*

1/30 100 @ $5.00 _____ 125 @ $6.185= $1,273

$1,527 100 @ $5.000(avg. cost is $5.658)

*rounded

c. FIFO Perpetual


1/ 1 140 @ $7.00 = $ 980

1/10 90 @ $7.00 = $ 630 50 @ $7.00 = $ 350

1/20 220 @ $6.00 50 @ $7.00= $1,670220 @ $6.00

1/25 50 @ $7.0095 @ $6.00 = $ 920 125 @ $6.00 = $ 750

1/30 100 @ $5.00 _____ 125 @ $6.00= $1,250$1,550 100 @ $5.00

Exercise 5-1 (Continued)


3/31

d. LIFO Perpetual


1/ 1 140 @ $7.00 = $ 980

1/10 90 @ $7.00 = $ 630 50 @ $7.00 = $ 350

1/20 220 @ $6.00 50 @ $7.00= $1,670220 @ $6.00

1/25 145 @ $6.00 = $ 870 50 @ $7.00= $ 80075 @ $6.00

1/30 100 @ $5.00 _____ 50 @ $7.00$1,500 75 @ $6.00 = $1,300

100 @ $5.00

Alternate Solution Format for FIFO and LIFO Perpetual

Ending Cost of Computations Inventory GoodsSold

c. FIFO(125 x $6.00) + (100 x $5.00)............................................. $1,250

(90 x $7.00) + (50 x $7.00) + (95 x $6.00)......................... $1,550d. LIFO

(50 x $7.00) + (75 x $6.00) + (100 x $5.00)....................... $1,300

(90 x $7.00) + (145 x $6.00)............................................... $1.500

Exercise 5-2(20 minutes)

LIBERTY COMPANYIncome Statements

For Month Ended January 31Specific

IdentificationWeightedAverage FIFO LIFO

Sales............................... $3,525 $3,525 $3,525 $3,525(235 units x $15 price)

Cost of goods sold........ 1,505 1,527 1,550 1,500Gross profit.................... 2,020 1,998 1,975 2,025Expenses....................... 1,250 1,250 1,250 1,250Income before taxes..... 770 748 725 775Income tax expense (30%). 231 224* 218* 233*Net income..................... $ 539 $ 524 $ 507 $ 542

* Rounded to nearest dollar.


4/31

Exercise 5-2 (Concluded)

1. LIFO method results in the highest net income of $542.

2. Weighted average net income of $524 falls between the FIFO net

income of $507 and the LIFO net income of $542.

3. If costs were rising instead of falling, then the FIFO method wouldyield the highest net income.


a. FIFO Perpetual


1/ 1 126 @ $ 8 = $1,008

1/10 113 @ $ 8 = $ 904 13 @ $ 8 = $ 104

3/14 315 @ $13 = $4,095 13 @ $ 8= $4,199315 @ $13

3/15 13 @ $ 8 148 @ $13 = $1,924

167 @ $13 = $ 2,275

7/30 250 @ $18 = $4,500 148 @ $13= $6,424250 @ $18

10/ 5 148 @ $13230 @ $18 = $ 6,064 20 @ $18 = $ 360

10/26 50 @ $23 = $1,150 20 @ $18______ 50 @ $23 = $1,510$9,243

Exercise 5-3 (Concluded)


5/31

a. LIFO Perpetual


1/ 1 126 @ $ 8 = $1,008

1/10 113 @ $ 8 = $ 904 13 @ $ 8 = $ 104

3/14 315 @ $13 = $4,095 13 @ $ 8= $4,199315 @ $13

3/15 13 @ $ 8= $1,859180 @ $13 = $2,340 135 @ $13

7/30 250 @ $18 = $4,500 13 @ $ 8135 @ $13 = $6,359250 @ $18

10/ 5 250 @ $18 = $4,500 13 @ $ 8128 @ $13 = 1,664 7 @ $13 = $ 195

$6,164

10/26 50 @ $23 = $1,150 13 @ $ 87 @ $13 = $1,345

_____ 50 @ $23$9,408

Alternate Solution Format

Ending Cost ofInventory Goods Sold

a. FIFO(20 x $18) + (50 x $23)............................................................ $1,510(113 x $8) + (13 x $8) + (167 x $13) + (148 x $13) +(230 x $18)......................................................................... $9,243

b. LIFO(13 x $8) + (7 x $13) + (50 x $23)........................................... $1,345(113 x $8) + (180 x $13) + (250 x $18) + (128 x $13)... .... $9,408

FIFO Gross Margin

Sales revenue (671 units sold x $40 selling price)................. $26,840Less: FIFO cost of goods sold................................................ 9,243

Gross profit................................................................................ $17,597

LIFO Gross MarginSales revenue (671 units sold x $40 selling price)................. $26,840Less: LIFO cost of goods sold................................................ 9,408Gross profit................................................................................ $17,432


6/31


7/31


a. Specific identification methodCost of goods sold

Cost of goods available for sale..................................... $10,753

Ending inventory under specific identification

3/14 purchase ( 5 @ $13) ....................................... $ 65

7/30 purchase ( 15 @ $18)....................................... 270

10/26 purchase ( 50 @ $23)....................................... 1,150

Total ending inventory under specific identification. . 1,485

Cost of goods sold under specific identification........ $ 9,268

b. Specific identification methodGross margin

Sales revenue (671 units sold x $40 selling price)........ $26,840

Less: Specific identification cost of goods sold.......... 9,268

Gross profit....................................................................... $17,572


Per Unit Total Total LCM applied toInventory Items Unit Cost Market Cost Market Products Whole

Helmets....... 19 $45 $49 $ 855 $ 931 $ 855

Bats.............. 12 73 67 876 804 804

Shoes........... 33 90 86 2,970 2,838 2,838

Uniforms...... 37 31 31 1,147 1,147 1,147 .

$5,848 $5,720 $5,644 $5,720

a. Lower of cost or market of inventory as a whole = $5,720


8/31

b. Lower of cost or market of inventory by product = $5,644


9/31


1. Correct gross profit = $1,100,000 - $700,000 = $400,000 (for eachyear)

2. Reported income figures

Year 2008 Year 2009 Year 2010

Sales................................ $1,100,000 $1,100,000 $1,100,000

Cost of goods sold

Beginning inventory....... $280,000 $262,000 $280,000

Cost of purchases.......... 700,000 700,000 700,000

Good available for sale... 980,000 962,000 980,000

Ending inventory............ 262,000 280,000 280,000

Cost of goods sold......... 718,000 682,000 700,000

Gross profit...................... $382,000

$418,000

$ 400,000



10/31

1.Jan. 1 Petty Cash 350

Cash.............................................................. 350To establish a petty cash fund.

2.Jan. 8 Postage Expense............................................... 67

Merchandise Inventory*.................................... 35Delivery Expense............................................... 52Miscellaneous Expenses.................................. 56

Cash.............................................................. 210To reimburse the petty cash fund.

* Transportation-in costs are included inMerchandise Inventory under a perpetual system.

3.Jan. 8 Postage Expense 67

Merchandise Inventory..................................... 35Delivery Expense............................................... 52Miscellaneous Expenses.................................. 56

Cash.............................................................. 210To reimburse the petty cash fund.*

Jan. 8 Petty Cash.......................................................... 200Cash.............................................................. 200

To increase the petty cash fund.** The two January 8 entries can be combined into one entry.



11/31

1.Sept. 9 Petty Cash 250

Cash.............................................................. 250To establish a $250 petty cash fund.

2.Sept. 30 Merchandise Inventory*.................................... 47

Postage Expenses............................................. 62Miscellaneous Expenses.................................. 103Cash Short and Over......................................... 4

Cash.............................................................. 216To reimburse the petty cash fund.

* Transportation-in costs are included inMerchandise Inventory under a perpetual system.

3.Oct. 1 Petty Cash.......................................................... 50

Cash.............................................................. 50To increase the petty cash fund to $300.


12/31


Bank Balance Book Balance Not Shown onAdd Deduc

tAdd Deduc

tAdjust Reconciliation

1. NSF check from customer returned on Sept.25 but not recorded by this company.

x Cr.

2. Interest earned on the account. x Dr.

3. Deposit made on September 5 andprocessed by bank on September 6.

x

4. Check written by another depositor butcharged against this company's account.

x

5. Bank service charge. x Cr.

6. Checks outstanding on August 31 thatcleared the bank in September.

x

7. Check written against the company accountand cleared by the bank; erroneously notrecorded by the company recordkeeper.

x Cr.

8. Principal and interest on a note receivable tothis company is collected by the bank butnot yet recorded by the company.

x Dr.

9. Checks written and mailed to payees onOctober 2.

x

10.

Checks written by the company and mailedto payees on September 30.

x

11

.

Deposit made on September 30 after the

bank closed. x

12.

Special bank charge for collection of note inNo. 8 on company's behalf.

x Cr.


13/31


AUSTIN CLINICBank Reconciliation

June 30, 2009

Bank statement balance..... $15,382 Book balance............................................................

$15,671

Add AddDeposit of June 30........... 2,933 Error on Ck. No. 919......... 9

18,315 15,680Deduct Deduct

Outstanding checks...... .. 2,700 Bank service charge........ 65Adjusted bank balance.. ... . $15,615 Adjusted book balance.. .. .. $15,615


WALSH COMPANYBank Reconciliation

May 31, 2009

Bank statement balance..... $6,900 Book balance............................................................

$7,750

Add

Deposit of May 31............ 1,100Bank error...................... 200

8,200Deduct Deduct

Outstanding checks........ 800 Bank service charge........ 50 _____ NSF check...................... 300

Adjusted bank balance... .. . $7,400 Adjusted book balance...... $7,400

Problem 6-2A (30 minutes)


14/31

Part 1

Feb. 2 Petty Cash....................................................... 300Cash........................................................... 300

To establish the $300 petty cash fund.


15/31

Part 2

Beard GalleryPetty Cash Payments Report (for February)

Delivery expense

Feb. 23 Delivery of customer's merchandise.......... $ 23.00

Mileage expenseFeb. 14 Reimbursement for mileage........................ 66.00

Postage expenseFeb. 12 Express delivery of contract....................... $ 7.85Feb. 27 Postage expense.......................................... 55.00 62.85

Merchandise inventory (transportation-in)*Feb. 9 COD charges on purchases........................ 32.50Feb. 25 COD charges on purchases........................ 10.30 42.80

Office supplies expenseFeb. 5 Purchased paper for copier......................... 14.55Feb. 20 Purchased stationery................................... 67.67 82.22

Total $276.87

* Transportation-in costs are included in Merchandise Inventory under a perpetualsystem.

Part 3

Feb. 28 Delivery Expense............................................ 23.00Mileage Expense............................................. 66.00Postage Expense............................................ 62.85Merchandise Inventory................................... 42.80Office Supplies Expense................................ 82.22Cash Over and Short...................................... 2.31

Cash........................................................... 279.18To reimburse the petty cash fund.

Feb. 28 Petty Cash....................................................... 100.00Cash........................................................... 100.00

To increase the petty cash fund to $400.

Note: The two Feb. 28 entries can be combined intoone.


16/31

Problem 6-3A (20 minutes)

Part 1

May 1 Petty Cash............................................................... 350.00Cash................................................................... 350.00

To establish the $350 petty cash fund.

May 15 Janitorial Expenses................................................ 109.20Miscellaneous Expenses....................................... 89.15Postage Expenses.................................................. 60.90Advertising Expense.............................................. 80.01

Cash Over and Short........................................ 6.10Cash................................................................... 333.16

To reimburse the petty cash fund.

May 16 Petty Cash............................................................... 200.00Cash................................................................... 200.00To increase the petty cash fund to $550.

Note: The May 31 entries can be combined into oneentry.

May 31 Postage Expenses.................................................. 59.10Mileage Expense.................................................... 47.05Delivery Expense.................................................... 48.58Cash Over and Short.............................................. 5.00

Cash................................................................... 159.73To reimburse the petty cash fund.

May 31 Cash......................................................................... 50.00Petty Cash......................................................... 50.00

To decrease the petty cash fund to $500.


17/31

Part 2

If the May 31 replenishment is not made and no entry is recorded,then several expenses would not be recognized and both net incomeand equity would be overstated by $159.73 ($59.10 + $47.05 + $48.58 +

$5.00). Also, the petty cash asset and total assets would beoverstated by $159.73.Problem 6-4A (30 minutes)

Part 1

HAMILTON COMPANYBank Reconciliation

July 31, 2009

Bank statement balance........ $28,575 Book balance......................

...........................................

$25,862

Add AddDeposit of July 31............... 7,152

35,727

Proceeds of note less

collection charge............. 5,97031,832

Deduct DeductChecks No. 3031....

$1,670

NSF check................$ 805

3065....

611

Service charge............. 9

3069... . 2,438 4,719 Error (Check 3056)...... 10 824Adjusted bank balance.......... $31,008 Adjusted book balance......... $31,008


18/31

Part 2

July31

Cash....................................................................... 5,970

Collection Expense............................................... 30

Notes Receivable............................................ 6,000To record note collection less fees.

July31

Accounts ReceivableE. Shaw.......................... 805

Cash................................................................. 805To charge account for NSF check plus fees.

July31

Miscellaneous Expenses...................................... 9

Cash................................................................. 9To record bank service fee.

July31

Rent Expense........................................................ 10

Cash................................................................. 10To correct an entry error.

Problem 6-4A (Concluded)

Part 3

a. If the company's Cash account balance of $25,862 is listed onthe bank reconciliation as $25,682 then:

(i) The final balance that results from adjusting the bankstatement balance will not be affected by the error; and

(ii) The final balance that results from adjusting the bookbalance of cash will be understated by $180 ($25,862 -$25,682), and the bank reconciliation will not balance.

b. The bank's collection of the $6,000 note less the $30 collectionfee should have been added to the book balance of cash.Instead, it was added to the bank statement balance. As aresult:

(i) The final balance that results from adjusting the bankstatement balance will be overstated by $5,970; and


19/31

(ii) The final balance that results from adjusting the bookbalance will be understated by $5,970.


20/31


Part 1

GENERAL LEDGER

Accounts Receivable SalesSales Returns and

AllowancesNov. 5 5,817 Nov. 21 268 Nov. 5 5,817 Nov. 21 268

10 1,774 10 1,77413 1,040 13 1,04030 3,698 30 3,698

Bal. 12,061Exercise 7-2 (concluded)Part 1continued

ACCOUNTS RECEIVABLE LEDGER

Ski Shop Welcome Enterprises Kit RoninNov. 5 5,817 Nov. 10 1,774 Nov. 13 1,04

0Nov. 21 268

30 3,698Bal. 9,515 Bal. 772

Part 2

Beachum Company

Schedule of Accounts ReceivableNovember 30, 2009

Ski Shop............................................................................... $ 9,515Welcome Enterprises.......................................................... 1,774Kit Ronin.............................................................................. 772Total...................................................................................... $12,061

Comparison: The total of the Schedule of Accounts Receivable($12,061) is proved with the balance of the Accounts Receivable

controlling T-account from Part 1 ($12,061).


21/31


Dec. 31 Bad Debts Expense............................................... 5,148Allowance for Doubtful Accounts.................. 5,148

To record estimated bad debts expense

(.006 x $858,000).

Feb. 1 Allowance for Doubtful Accounts....................... 429Accounts ReceivableD. Fidel..................... 429

To write off an account.

June 5 Accounts ReceivableD. Fidel........................... 429 Allowance for Doubtful Accounts.................. 429

To reinstate an account.

June 5 Cash....................................................................... 429Accounts ReceivableD. Fidel..................... 429

To record cash received on account.


a.Dec. 31 Bad Debts Expense*.............................................. 419

Allowance for Doubtful Accounts................ 419To record estimated bad debts expense.

*Unadjusted balance = $2,371 credit

Estimated balance ($139,500 x .02) = 2,790 credit Required adjustment = $ 419 credit

b.Dec. 31 Bad Debts Expense**............................................. 3,277

Allowance for Doubtful Accounts................ 3,277To record estimated bad debts expense.

** Unadjusted balance = $ 487 debit

Estimated balance ($139,500 x .02) = 2,790 credit

Required adjustment = $3,277 credit



22/31

a. Computation of the estimated balance of the allowance foruncollectibles:

Not due: $66,000 x 0.01 = $ 6601 to 30: 15,000 x 0.02 = 300

31 to 60: 6,000 x 0.04 = 24061 to 90: 3,000 x 0.07 = 210Over 90: 5,000 x 0.12 = 600

$2,010 credit

b.Dec. 31 Bad Debts Expense.......................................... 2,310

Allowance for Doubtful Accounts............ 2,310To record estimated bad debts.*

* Unadjusted balance........................... $ 300 debitEstimated balance............................. 2,010 credit

Required adjustment......................... $2,310 credit

c.Dec. 31 Bad Debts Expense.......................................... 1,810


* Unadjusted balance........................... $ 200 creditEstimated balance............................. 2,010 credit



a. Computation of the estimated balance of the allowance foruncollectibles:

$95,000 x 0.02 = $1,900 credit

b.Dec. 31 Bad Debts Expense.......................................... 2,200


* Unadjusted balance........................... $ 300 debit


23/31

Estimated balance............................. 1,900 credit



24/31

c.Dec. 31 Bad Debts Expense.......................................... 1,700


* Unadjusted balance........................... $ 200 creditEstimated balance............................. 1,900 credit



Feb. 1 Allowance for Doubtful Accounts....................... 950Accounts ReceivableLaguna Co................ 200Accounts ReceivableMalibu Co................. 750

To write off specific accounts.

June 5 Accounts ReceivableLaguna........................... 200 Allowance for Doubtful Accounts.................. 200

To reinstate an account.

June 5 Cash....................................................................... 200Accounts ReceivableLaguna..................... 200



a. Expense is 2% of credit sales

Dec. 31 Bad Debts Expense............................................ 6,000Allowance for Doubtful Accounts............... 6,000

To record estimated bad debts[$300,000 x .02].


25/31

b. Expense is 1% of total sales


To record estimated bad debts[($300,000 + $400,000) x .01].

c. Allowance is 8% of accounts receivable


To record estimated bad debts.*

* Unadjusted balance.................................... $1,000 debit.

Estimated balance ($65,000 x 8%)............. 5,200 credit

Required adjustment.................................. $6,200 credit


July 4 Accounts Receivable........................................ 7,160Sales............................................................. 7,160

To record sales on credit.

4 Cost of Goods Sold........................................... 4,582Merchandise Inventory............................... 4,582

To record cost of sales.

9 Cash.................................................................... 19,285Factoring Fee Expense*.................................... 1,015

Accounts Receivable.................................. 20,300To record sale of receivable. *($20,300 x .05)

17 Cash.................................................................... 3,938Accounts Receivable.................................. 3,938


27 Cash.................................................................... 11,000Notes Payable.............................................. 11,000To record cash from a loan.

Note to Financial StatementsAccounts receivable in the amount of $14,700 are pledged as

security for a $11,000 note payable to Main Bank.


26/31


Nov. 1 Notes ReceivableC. Cruz............................. 15,000Accounts ReceivableC. Cruz................. 15,000

To record receipt of note on account.

Dec. 31 Interest Receivable.......................................... 175Interest Revenue........................................ 175

To record interest earned[$15,000 x .07 x 60/360].

Apr. 30 Cash.................................................................. 15,525Notes ReceivableC. Cruz....................... 15,000Interest Revenue........................................ 350Interest Receivable.................................... 175

To record cash received on note plusinterest earned [$15,000 x .07 x 120/360].


Mar. 21 Notes ReceivableJ. Penn............................. 17,200Accounts ReceivableJ. Penn................ 17,200

To record receipt of note on account.

Sept. 17 Accounts ReceivableJ. Penn...................... 17,802Interest Revenue........................................ 602Notes ReceivableJ. Penn....................... 17,200

To record note dishonored plus interestearned [$17,200 x .07 x 180/360 = $602].

Dec. 31 Allowance for Doubtful Accounts.................. 17,802Accounts ReceivableJ. Penn................ 17,802

To write off an account.


27/31


Purchase price......................................................... $404,000Closing costs............................................................ 21,500Total cost of acquisition.......................................... $425,500

Allocation of total costAppraised

ValuePercentof Total

Applying %to Cost

ApportionedCost

Land.......................... $217,140 47% $425,500 x .47 $199,985

Land improvements........... 83,160 18 $425,500 x .18 76,590

Building.................... 161,700 35 $425,500 x .35 148,925

Totals........................ $462,000 100 % $425,500

Journal entryLand..................................................................... 199,985Land Improvements........................................... 76,590Building............................................................... 148,925

Cash............................................................. 425,500

To record costs of lump-sum purchase.



28/31

Double-declining-balance depreciationDepreciation rate: 100% / 4 years = 25% x 2 = 50%

YearBeginning-Year

Book ValueDepreciation

RateAnnual

DepreciationYear-EndBook Value

2009....... $102,000 50% $51,000 $51,000

2010....... 51,000 50 25,500 25,500

2011....... 25,500 50 4,500* 21,000

2011....... 21,000 -- -- 21,000

Total....... $81,000

* Do not depreciate more than $4,500 in the third year since thesalvage value is not subject to depreciation.


Units-of-production:

Depreciation per unit = ($67,000 - $4,000) / 420,000 units = $0.15 perunit

For 29,900 units in second year: Depreciation = 29,900 x $0.15 =

$4,485


Double-declining-balance:

Double-declining-balance rate = (100% / 10 years) x 2 = 20% per year

First years depreciation = $67,000 x 20% = $13,400

Book value at beginning of second year = $67,000 - $13,400 = $53,600Second years depreciation = $53,600 x 20% = $10,720Exercise 8-9 (10 minutes)


29/31

Straight-line depreciation for 2009

($253,000 - $25,300) / 5 years = $45,540


1. Original cost of machine................................................ $ 26,400Less two years' accumulated depreciation

[($26,400 - $2,900) / 4 years] x 2 years....................... (11,750)

Book value at end of second year................................. $ 14,650

2. Book value at end of second year................................. $ 14,650

Less revised salvage value............................................ (2,050)

Remaining depreciable cost........................................... $ 12,600

Revised annual depreciation = $12,600 / 3 years = $4,200


1. Equipment............................................................... 29,500Cash.................................................................. 29,500

To record betterment.

2. Repairs Expense.................................................... 7,375Cash.................................................................. 7,375

To record ordinary repairs.

3. Equipment............................................................... 22,450Cash.................................................................. 22,450

To record extraordinary repairs.


2013July 1 Depreciation Expense........................................... 5,875

Accumulated Depreciation--Machinery.......... 5,875


30/31

To record one-half year depreciation.*

*Annual depreciation = $94,000 / 8 years = $11,750Depreciation for 6 months in 2013 = $11,750 x 6/12 = $5,875

1. Sold for $43,593 cash

July 1 Cash...................................................................... 43,593Accumulated DepreciationMachinery............ 52,875

Gain on Sale of Machinery.............................. 2,468Machinery.......................................................... 94,000

To record sale of machinery.*

*Total accumulated depreciation at date of disposal:Four years 2009-2012 (4 x $11,750)......... $47,000Partial year 2013 (6/12 x $11,750)............. 5,875Total accumulated depreciation.............. $52,875

Book value of machinery = $94,000 - $52,875 = $41,125Gain on sale = $43,593 - $41,125 = $2,468


31/31

2. Destroyed by fire with $39,480 cash insurance settlement

July 1 Cash...................................................................... 39,480Loss from Fire...................................................... 1,645

Accumulated DepreciationMachinery............ 52,875Machinery.......................................................... 94,000

To record disposal of machinery from fire.

Loss on sale = $39,480 - $41,125 = $(1,645)


Dec. 31 Depletion ExpenseMineral Deposit............... 498,960Accumulated DepletionMineral Deposit... 498,960

To record depletion [$3,920,000/1,400,000 tons =$2.80 per ton; 178,200 tons x $2.80 = $498,960].

Dec. 31 Depreciation ExpenseMachinery .................. 26,730Accumulated DepreciationMachinery...... 26,730

To record depreciation [$210,000/1,400,000 tons=$0.15 per ton; 178,200 tons x $0.15 = $26,730].


Jan. 1 Copyright............................................................. 432,000

Cash................................................................. 432,000To record purchase of copyright.

Dec. 31 Amortization ExpenseCopyright................... 28,800Accumulated AmortizationCopyright....... 28,800

To record amortization of copyright[$432,000 / 15 years].

220ch5 8 solutions

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