(Reporting the Financial Effects of Varied Transactions) In an examination of Ar
ID: 2449448 • Letter: #
Question
(Reporting the Financial Effects of Varied Transactions) In an examination of Arenes Corporation as of December 31, 2014, you have learned that the following situations exist. No entries have been made in the accounting records for these items.
1. The corporation erected its present factory building in 1999. Depreciation was calculated by the straight-line method, using an estimated life of 35 years. Early in 2014, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as of January 1, 2014.
2. An additional assessment of 2013 income taxes was levied and paid in 2014.
3. When calculating the accrual for officers’ salaries at December 31, 2014, it was discovered that the accrual for officers’ salaries for December 31, 2013, had been overstated.
4. On December 15, 2014, Arenes Corporation declared a cash dividend on its common stock outstanding, payable February 1, 2015, to the common stockholders of record December 31, 2014. Instructions Describe fully how each of the items above should be reported in the financial statements of Arenes Corporation for the year 2014.
Explanation / Answer
Effect to all the items shall be given as per the attached jounal entries. A detailed view is elaborated. In case of any query please let me know.
S.no
Particulars
Dr.
Cr.
1
Depreciation A/c ______________________________Dr.
XXXXX
To Fixed Asset (Depreciation effect for 10 years)
XXXXX
2
P&L A/c ______________________________________Dr.
XXXXX
To Depreciation (With the amount of depreciation debited)
XXXXX
S.no
Particulars
Dr.
Cr.
1
Income Tax ___________________________________Dr.
XXXXX
To Income Tax Payable
XXXXX
2
Income Tax Payable _____________________________Dr
XXXXX
To Cash/bank
XXXXX
S.no
Particulars
Dr.
Cr.
1
Revaluation A/c _____________________________Dr.
XXXXX
To P&L (With the amount of salaries overstated added back)
XXXXX
S.no
Particulars
Dr.
Cr.
1
P&L A/c _____________________________________ Dr.
XXXXX
To Proposed Dividend (With the amount of dividend)
XXXXX
CA Akshay
S.no
Particulars
Dr.
Cr.
1
Depreciation A/c ______________________________Dr.
XXXXX
To Fixed Asset (Depreciation effect for 10 years)
XXXXX
2
P&L A/c ______________________________________Dr.
XXXXX
To Depreciation (With the amount of depreciation debited)
XXXXX
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