Question

For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Recorded $200 of depreciation expense. b. Sold land that had originally cost $9,000 for $12,000 in cash. c. Acquired a new machine under a financing lease. The present value of future lease payments, discounted at 11%, was $11,000. d. Recorded the first annual payment of $2,500 for the leased machine (in part c). e. Recorded a $6,900 payment for the cost of developing and registering a trademark. f. Recognized periodic amortization for the trademark (in part e) using a 32-year useful life. g. Sold used production equipment for $17,000 in cash. The equipment originally cost $46,000, and the accumulated depreciation account has an unadjusted balance of $23,700. It was determined that a $1,600 year-to-date depreciation entry must be recorded before the sale transaction can be recorded. Record the adjustment and the sale. Transaction Liabilities Assets Accumulated depreciation -200 Net Income Depreciation expenses -200 a. b. c. d. 0. f. g

Answer 1

Accounting equation

Transaction	Assets	Liabilities	Net income
a	Accumulated depreciation -200		Depreciation expense -200
b	Land -9000		Gain on sale of land +3000
	Cash +12000
c	Machine +11000	Lease payable +11000
d	Cash -2500	Lease payable -2500
e	Trademark +6900
	Cash -6900
f	Trademark -216		Amortization expense -216
g	Cash 17000		Loss on sale of equipment -3700
	Equipment -46000
	Accumulated depreciation -25300