Presented below is information related to Doozy Woozie Company for 2016. (All balances are normal.) Retained earnings balance, January 1, 2016 $ 980,000 Sales for the year 25,000,000

Ensure to include correct dollar signs, underlines & double underlines, when required. Ensure to use proper financial document format details such as blank lines where required. Unless otherwise noted, all fiscal years end on December 31.

Presented below is information related to Doozy Woozie Company for 2016. (All balances are normal.)

Retained earnings balance, January 1, 2016	$ 980,000
Sales for the year	25,000,000
Cost of goods sold	17,000,000
Interest revenue	70,000
Selling and administrative expenses	4,700,000
Write-off of goodwill (not tax deductible)	820,000
Income taxes for 2016	905,000
Gain on the sale of investments (normal recurring)	110,000
Loss on the disposition of the wholesale division	800,000
Loss on operations of the wholesale division	250,000
Income tax benefit from discontinued wholesale division	280,000
Dividends declared on common stock	250,000
Dividends declared on preferred stock	202,500

Doozy Woozie Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Doozy Woozie sold the wholesale operations to Flippy-Floppy Company. During 2016, there were 150,000 shares of common stock outstanding all year.

Requirement: Prepare a multistep income statement.

On June 1, 2014, Flippy-Floppy purchased a manufacturing machine for $830,000. Additionally, FOB Shipping Point was $4,000. Flippy-Floppy paid $20,000 to modify the production line to accommodate the new machine. Handy-Dandy charged an installation and testing fee of $10,000. The machine has an eight-year estimated life and a $44,000 estimated salvage value. Flippy-Floppy expects to manufacture 1,800,000 units over the life of the machine.

Required: Complete the required depreciation schedules on the manufacturing machine for each method listed. (Do not provide any supporting calculations.)

            The additional production information is as follows:

Year	Production	Year	Production
2014	110,000	2018	500,000
2015	300,000	2019	450,000
2016	350,000	2020	375,000
2017	350,000	2021	400,000

            Schedules for:

a.   Straight-line.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016

b.   Double-declining balance.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021
2022

c.   Sum-of-the-years’ digits.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021
2022

d.   Units of production.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021

Selected accounts included in the property, plant, and equipment section of Flipper Corporation’s balance sheet at December 31, 2014, had the following balances:

Land	$ 400,000
Land improvements	130,000
Buildings	2,000,000
Machinery and equipment	800,000

During 2015, the following transactions occurred:

a.  On January 31 a tract of land was acquired for $220,000 as a potential future building site from Flopper Corp.

b.  On March 1 a plant facility consisting of land and building was acquired from Flimsy Company in exchange for 20,000 shares of Flipper’s common stock. On the acquisition date, Flipper’s stock had a closing market price of $45 per share on a national stock exchange. The plant facility was carried on Flimsy’s books at $178,000 for land and $520,000 for the building at the exchange date. Current appraised values for the land and the building, respectively, are $200,000 and $800,000. The building has an expected life of forty years with a $20,000 salvage value.

c.   One June 1 machinery and equipment were purchased from Guess Who Equipment at a total cost of $400,000. Additional costs were incurred as follows: freight and unloading, $13,000; installation, $26,000. The equipment has a useful life of ten years with no salvage value.

d.  On August 1 expenditures totaling $ 120,000 were made for new parking lots, street, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of fifteen years.

e.   On September 1 research and development costs of $110,000 were paid for the year.

            Flipper uses the double-declining balance method of depreciation for all office equipment, fixtures and machinery. Additionally, Flipper uses the straight-line method of depreciation for all other fixed assets that require depreciation or amortization.

Required:

Provide the capitalized cost & depreciation or amortization for each asset acquired during 2015. Prepare the General Journal entries for any amortization and depreciation expense recorded for each of the acquired items in 2015. If no entry is necessary, write “no entry.”

Selected accounts included in the property, plant, and equipment section of Faulty Corporation’s balance sheet at December 31, 2017, had the following balances:

Land	$ 400,000
Land improvements	130,000
Buildings	2,000,000
Machinery and equipment	800,000

During 2018, the following transactions occurred:

>> A machine costing $18,000 on July 1, 2016, was scrapped on June 30, 2018. As of January 1, 2018 sum-of-the-years digit method depreciation had been recorded on the basis of a 5-year life with no salvage value.

>> A machine was sold for $38,000 on July 1, 2018. Original cost of the machine was $72,000 on February 28, 2015. It was depreciated on the double-declining balance basis over an estimated useful life of eight years and a salvage value of $2,000.

Required:

a. Calculate the gain or loss on the disposal of each asset. Place your answer in the appropriate column.

b. Prepare the journal entries for the disposal & sale of the machine during 2018. Year 2018 depreciation has yet to be recorded.

 

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"