Question

I need assistance in entering these into Journal entries.

Especially part 3 Property Plant and Equipment. I am confused on how to depreciate the items properly (please show work on how to do it)

1. Using the Journal, record the transactions that occurred during 2017. If no specific date is provided for a transaction, leave the date column blank. Since there are several transactions for which no date is given, the journal entries, do NOT need to be in chronological order. All adjusting and closing entries should have Dec 31, 2017, as the date.

**Second Page info BelowHarriets Hats, Inc. Harriets Hats is a fictional company. The following information includes the balance sheet as of Decemb

4. Debt

a. On August 1, 2017, Harriet’s paid-off the note payable that was outstanding at the beginning of the period. The note had an 10% interest rate, had been issued on August 1, 2016, and required semiannual interest payments on Jan 31, 2017 and July 31, 2017.

b. On October 1, 2017, Harriet’s borrowed $120,000 on a new note payable. The new note carries a 6% interest rate with semiannual interest payments required on March 31, 2018 and September 30, 2018.

5. Operations

a. Harriet’s made a rent payment of $51,000 on August 1, 2017. The payment was for rent on the store building and was prepaid for one year. The balance in the prepaid account at the end of 2016 represents the rent for January through July 31, 2017 that was paid for on August 1, 2016.

b. Cash paid out during 2017 for wages totaled $142,000. Records indicate that salaries for the last week of December 2017 amounted to $25,000 and will be paid at the end of the first week in January 2018 (a two-week pay period).

c. Other expenses (paid in cash) totaled $38,000.

6. Income Taxes a. On March 15, 2017, Harriet’s paid their 2016 income taxes. Harriet’s will pay their 2017 income taxes on March 15, 2018. Harriet’s has a 40% income tax rate for both 2016 and 2017.

7. Common Stock

a. On December 1, 2017, dividends of $35,000 were declared and paid.

b. On January 1, 2017, Harriet’s issued 10,000 additional shares of common stock for $10 per share.

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Answer #1

Dear Student - As per question above m you are more confused with depreciation calculation and Journal Entries . i have provided complete break down for the same . i am not covering all other entries .

Any doubt , please drop me message , I will help you to sort out your doubt .

Thank you .

ID Number Historical Cost($)-A Useful Life-D Salvage value ($)-B Depreciable Amount $ ( A-B)=C Depreciation $(C/D) Date Acquired
1256        60,000               12                -        60,000         5,000 Jan1,2007
1876     1,00,000               10      15,000      85,000         8,500 Jan1,2008
4299        92,000               15         5,000      87,000         5,800 Jan1,2009
       42,000               10         4,000      38,000         3,800
Total 2,70,000      23,100
Asset sold on 1st oct 2017 ( ID 1876 ) amount to $ 16825
After 9 Years asset sold . So depreciated Value
Per year $           8,500
9 Year value $        76,500
Depreciation reduced to 9 Months $           6,375
($8500/12*9)
Value of Asset        70,125
Total Depreciation Amnt($)
ID Number 1256           5,000
1876           6,375
4299           5,800
New Asset           3,800
Total Depreciation        20,975
Journal Entries
Details Debit($) Credit($)
Depreciation Expenses        20,975
Accumulated depreciation      20,975
( depreciation accounted)
Asset        42,000
Cash      42,000
( New asset purchased)
Cash        16,825
Loss on Sale of Asset        53,300
Asset      70,125
( record sale of asset with recognition of losses)
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