Question

Problem 1 Shaw Corporation recently requested a contractor to prepare a proposal to refurbish the exterior of its office building. Shaw wanted to give its building a "face lift" The contractor provided the following bid document: Add extension to front porch approac $70,000 Install shrubs and trees 8,750 Replace rotting exterior siding material 26,250 Replace burned out exterior light bulbs 1,750 Assume that Shaw Corporation agreed to the bid, and authorized the work. What journal entry would be appropriate for each of the above expenditures? Worksheet GENERAL JOURNAL Date Accounts Debit Credit To record addition to existing building

Answer 1

Shaw Corporation Span Forklift Journal Enteries Date Particulars Building a/c Dr. To Cash (To record addition to existing building) Debit in $ Credit in $ 70000 70000 Journal Enteries Date Particulars Debit in $ Credit in $ Issue Investment in Bonds a/c Dr. 102000 To Cash 102000 (To record purchase of $100000, 6% 8 year bonds at 102 - interest semi annually) 8750 Land Improvements a/c Dr. To Cash (To record addition of landscaping) 8750 Interest Cash a/c Dr. 3000 To Investment in Bonds To Interest Income (To record receipt of an interest payment) 100000 x 6% x 6/12 = 3000; 2000 x 6/96 = 125 amort. 125 2875 26250 Accumulated Depreciation a/c Dr. To Cash (To record replacement of siding material) 26250 1750 100000 Repair Expense a/c Dr. To Cash (To record replacement of light bulbs) Maturity Cash a/c Dr. 100000 To Investment in Bonds (To record the redemption of bond investment at maturity) 1750 Total cash outflow was $102000 and total cash inflow was $148000 ((3000 x 16 ) + 100000). The 46000 difference is equivalent to the interest income that would be recognized over time (2875x 16)

Titanium Mines Journal Enteries Date Particulars Jan-01 Machine a/c Dr. To Cash To record purchase of engine Debit in $ Credit in $ 1250000 1250000 243750 31.12.20x5 Depreciation Expense a/c Dr. To Accumulated Depreciation To record 20x5 Depreciation 243750 262500 31.12.20x6 Depreciation Expense a/c Dr. To Accumulated Depreciation To record 20x6 Depreciation 262500 225000 31.12.20x7 Depreciation Expense a/c Dr. To Accumulated Depreciation To record 20x7 Depreciation 225000 206250 31.12.20X8 Depreciation Expense a/c Dr. To Accumulated Depreciation To record 20X8 Depreciation 206250 Dr. 31.12.20X8 Cash a/c Accumulated Depreciation a/c To Equipment 312500 937500 Dr. 1250000

Year X6 Annual Expense 243750 262500 225000 206250 Accum. Depre. Expense Calculation 243750 1250000 x 3250 / 12500 506250 1250000 x 3500 / 12500 731250 1250000 x 3000 / 12500 937500 1250000 x 2750 / 12500 X7 X8 Property Plant & Equipment (20X6) Aircraft Engine Less:Accumulated Depreciation 1250000 -506250 743750