Question

Problems for Section 8B 8B-1. RASPBERRY Corporation's chart of accounts includes the following categories: Land, Equipment, Patents, Copyrights, and Coal Reserves. RASPBERRY completed the following transactions during the year: Jan 2 Feb 3 Purchased Equipment for $140,000 cash; RASPBERRY also had to pay 10% tax and a $6,000 license fee. Purchased a coal field with 40,000 tons of coal reserves for $2,000,000 cash. Purchased a copyright from another company for $120,000 cash. Purchased a patent and a piece of land for a lump sum payment of $60,000. The land was appraised at $80,000 while the patent appraised at $20,000. March 4 May 5 Chapter 8 Section B

Answer 1

1)

Jan-02 Equipment Account Amount Credit $1,60,000 Amount Debit Cash A/C Debit Cash Account Amount Credit Equipment A/C Amount $1,60,000 Feb-03 Coal Field Amount Credit $20,00,000 Amount Debit Cash A/C Debit Cash Account Amount Credit Coal Field Amount $20,00,000 Mar-04 Copyright Amount Credit $1,20,000 Amount Debit Cash A/C Debit Cash Account Amount Credit Copyright A/C Amount $1,20,000 May-05 Patent Amount Credit $12,000 Amount Debit Cash A/C Debit Cash Account Amount Credit Patent A/C Land A/C Amount $12,000 $48,000

May-05 Patent Amount Credit $12,000 Amount Debit Cash A/C Debit Cash Account Amount Credit Patent A/C Land A/C Amount $12,000 $48,000 Land Amount Credit $48,000 Debit Cash A/C Jul-01 Amount Cash Account Amount Credit Debit Amount Debit Amount Building Amount Credit Accumulated $8,00,000 Depreciation Cash A/C $8,00,000 Total Opening Balance $4,20,000 $3,80,000 $8,00,000 Building A/C Profit on Sale A/C $3,80,000 $5,60,000 Total Debit Building A/C Accumulated Depreciation A/C Amount Credit $4,20,000 Opening Balance Profit and Loss A/C $4,20,000 Total Debit Profit and Loss A/C Profit on Sale A/C Amount Credit $5,60,000 Cash A/C Amount $5,60,000 Amount $4,00,000 $20,000 $4,20,000 Total

Profit and Loss A/C Amount Credit Amount Debit Accumulated Depreciation A/C $20,000 Profit on Sale A/C $5,60,000 Oct-02 Debit Debit Opening Balance Cash Account Amount Credit New Equipment A/C Amount $1,30,000 Total Old Equipment Amount Credit Amount $85,000 Accumulated Depreci $60,000 New Equipment $25,000 $85,000 Total $85,000 New Equipment Amount Credit Amount $1,30,000 $25,000 $25,000 Debit Profit and Loss A/C Amount Credit Amount New Equipment A/C $25,000 Debit Cash A/C Old Equipment Profit and Loss A/C Accumulated Depreciation A/C Amount Credit $65,000 Opening Balance Debit Old Equipment Amount $65,000 Total $65,000 Total $65,000

Note -1

Building:

S.No	Particulars			Amount
A	Purchase Cost (A)			$8,00,000
B	Useful Life ( Years ) (B)			20
C	Residual Value (C)			$0
D	Depreciable Value (D = A-C)			$8,00,000
E	Depreciation Per Anum (E = A/B)			$40,000
F	Depreciation from Dec'31st to July 1st (E*6)/12			$20,000
G	Total Accumulated Depreciation ( $400000 + $20000)			$4,20,000
H	Book Value on the date of sale (A-G)			$3,80,000
I	Sale Cosideration			$9,40,000
J	Profit on Sale (I - H)			$5,60,000

2)

Equipment :

S.No	Particulars			Amount
A	Purchase Cost (A)			$1,60,000
B	Useful Life ( Years ) (B)			5
C	Residual Value (C)			$10,000
D	Depreciable Value (D = A-C)			$1,60,000
E	Depreciation Per Anum (E = A/B)			$32,000
F	Depreciation Rate			20%
G	Tripple Depreciation Rate			60%
H	Depreciation Expense(D*G)			$96,000

Equipment
Accumulated Depreciation A/C					Depreciation A/C
Debit	Amount	Credit	Amount		Debit	Amount	Credit	Amount
		Depreciation A/C	$96,000		Profit and Loss A/C	$96,000	Accumulated Depreciation A/C	$96,000

Coal Field :

Units of Production Method of Depreciation ( Amount in $ )
Year	Cost (A)	Depreciable Amount (B)	Total Capacity ( Tons ) (C)	Units Produced in the Year (D)	Depreciation Per Year (E)=(B)/(C) *	Accumulated Depreciatoin(F)	Carrying Value (G) = (A)-(F)
1	$20,00,000	2000000	40000	3000	$1,50,000	$1,50,000	$18,50,000

Coal Field
Accumulated Depreciation A/C					Depreciation A/C
Debit	Amount	Credit	Amount		Debit	Amount	Credit	Amount
		Depreciation A/C	$1,50,000		Profit and Loss A/C	$1,50,000	Accumulated Depreciation A/C	$1,50,000

Copy Right:

S.No	Particulars			Amount
A	Purchase Cost (A)			$1,20,000
B	Useful Life ( Years ) (B)			4
C	Residual Value (C)			$0
D	Depreciable Value (D = A-C)			$1,20,000
E	Depreciation Per Anum (E = A/B)			$30,000
	Depreciation Expense (E *302/365 days)			$24,822

Copyright
Accumulated Depreciation A/C					Depreciation A/C
Debit	Amount	Credit	Amount		Debit	Amount	Credit	Amount
		Depreciation A/C	$24,822		Profit and Loss A/C	$24,822	Accumulated Depreciation A/C	$24,822

Patents:

S.No	Particulars			Amount
A	Purchase Cost (A)			$12,000
B	Useful Life ( Years ) (B)			5
C	Residual Value (C)			$0
D	Depreciable Value (D = A-C)			$12,000
E	Depreciation Per Anum (E = A/B)			$2,400
	Depreciation Expense (E *241/365 days)			$1,585

Patent
Accumulated Depreciation A/C					Depreciation A/C
Debit	Amount	Credit	Amount		Debit	Amount	Credit	Amount
		Depreciation A/C	$1,585		Profit and Loss A/C	$1,585	Accumulated Depreciation A/C	$1,585

New Equipment:

S.No	Particulars			Amount
A	Purchase Cost (A)			$1,80,000
B	Useful Life ( Years ) (B)			6
C	Residual Value (C)			$0
D	Depreciable Value (D = A-C)			$1,80,000
E	Depreciation Per Anum (E = A/B)			$30,000
	Depreciation Expense (E *90/365 days)			$7,397

New Equipment
Accumulated Depreciation A/C					Depreciation A/C
Debit	Amount	Credit	Amount		Debit	Amount	Credit	Amount
		Depreciation A/C	$7,397		Profit and Loss A/C	$7,397	Accumulated Depreciation A/C	$7,397