Fleet Inc. is an athletic footware company that began operations on jan 1, 2012.
ID: 2346313 • Letter: F
Question
Fleet Inc. is an athletic footware company that began operations on jan 1, 2012. the following transactions relate to debt investments acquired by Fleet Inc. which has fiscal year ending on december 31:2012
Mar 1. Purchased $36,0000of madison Co. 5% 10-year bonds at face value plus accrued interest of $15. the bonds pay interest semiannually on february 1st and august 1
apr 16 purchased $45,0000 of Westville 4%, 15-year bonds at face value plus accrued interest semianually on april 1st and october 1st.
aug 1. received semiannuall interest on the madison co. bonds
sep 1 sold $12,0000 of madison co bonds at 98 plus accrued interest of $50
oct 1 received semiannual interest on westville bonds
dec 31 accrued $500 interest on Madison Co. bonds
dec 31 accrued $450 interest on westville bonds
2013
feb 1 received semiannual interest on the madison co bonds
apr 1 received semiannual interest on the Westville bonds
Instructions
1. Journalize the entries to record the transactions
2. if the bond portfolio was classified as available-for-sale, what impact would that have on financial statement disclosure
Explanation / Answer
1. A. January 1. Purchased a used delivery truck for $4,200, cash Dr Delivery truck $4,200 Cr Cash $4,200 B. January 4. Paid $2,000 for a major repairs necessary to get the truck in driving condition Dr Delivery truck $2,000 Cr Cash $2,000 C. December 31. Recorded depreciation expense, $1,000, at the end of the accounting period Dr Depreciation - delivery truck $1,000 Cr Accum depr - delivery truck $1,000 2. Present the adjusting entry to amortize the patent for the current year Dr Amortization expense $100,000 Cr Accum amortization - patent $100,000 Rights to a mineral depost estimated at 5,000,000 tons of ore were acquired for $7,500,000. What is the amount of the depletion for the current year during which 500,000 tons of ore were removed. (Depletion for 1 ton = $7,500,000/5,000,000 tons = $1.50 Present the adjusting entry to record the depletion for the current year. Dr Depletion expense $750,000 (500,000 x $1.50) Cr Accum depletion $750,000
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