Question

Required information [The following information applies to the questions displayed below.] Precision Construction entered into the following transactions during a recent year January 2 Purchased a bulldozer for $268,000 by paying $29,000 cash and signing a $239,000 note due in five years. January 3 Replaced the steel tracks on the bulldozer at a cost of $29,000, purchased on account. The new steel tracks increase the bulldozer's operating efficiency January 30 wrote a check for the amount owed on account for the work completed on January 3. February 1 Repaired the leather seat on the bulldozer and wrote a check for the full $1,700 cost. March 1 Paid $9,000 cash for the rights to use computer software for a two-year period.

Answer 1

solution Journal entries for the 16) Preparation of transactions Date and Jan Account's title and explanation Debit (1) credit($) cauilment Alc 2,68,000 Cash Ale 29.000 Notes Payable 2.39,000 (To recar Purchase al Buldozer) 3rd Jan 29.000 29.000 Equilment Ala To accounts Payable (to recand replace of steel trackson account) 30th Jan 29,000 Accounts Payable Ale 29,000 Cash Ale (To recand payment for replacing stees tracks) Repair Are 1.700 cash Ale (to recond expenses for replacing seat of bulldozer) 1st Feb 1,700

1st Mar License Right's Alc 9.000 9,000 Cash Ale (To recording the Licence rights are purchased for using computer software) @ computation of Depreciation - equipment and Amortization - Licensing ratio Defreciation rate = 2x 100% - 40% Deloreciation (Cost cu replacement Cost) Dehre ciatia x2 rate = ($ 2,68,000 4) 39,000) X 40% X3 - 9,94,000 X 40% X3 = 1.18.800 X 3 = $29, too Amortization expenses = (cost of license rights - salvage 1 value estimated life (9,000 - 0) 8 x 1/2 = $375 > Depreciation Amortization expenses Partial year 29.400 375

③ Preparation of depreciation Journal entry to record the and amortization expenses Date 31 mg General Joural Debit (8) Credit (8) Depreciation - eauilment 29.700 Amantization - expenses 345 Accumulated depreciational 30,075 (to recand Depreciations charges and licenceright's has been Amortized )