ACCOUNTS A. Accounts Receivable F.Depletion Expense K.Notes Payable B. Accumulat

Question

ACCOUNTS
A. Accounts Receivable F.Depletion Expense K.Notes Payable
B. Accumulated Depletion G.Equipment L.Notes Receivable
C.Accumulated Depreciation—Equipment H.Gain on Disposal of Fixed Assets M. Research and Development
D. Amortization Expense—Patents I.Goodwill Expense
E. Cash J. Loss on Disposal of Fixed Assets N. Patents

1-2. Traded in old equipment for similar equipment priced at $75,000, receiving a trade-in allowance of $8,000 and paying the balance in cash. (Cost of the old equipment was $37,500; accumulated depreciation, $30,000)
3-4. Traded in equipment costing $47,500, with accumulated depreciation of $30,000, for similar equipment priced at $60,000; received a trade-in allowance of $5,000 and issued a note for the balance
5-6. Paid research and development expense, $40,000
7-8. Discarded equipment: cost, $83,750; accumulated depreciation, $82,750
9-10. Sold for $5,000 cash the following equipment: cost, $57,500; accumulated depreciation, $55,000
11-12. Sold on account for $8,000 the following equipment: cost, $32,000; accumulated depreciation, $15,000
13-14. Recorded depletion, $18,500


Credit and Debit for each number...what account goes with each credit and debit..may be more than 1

Explanation / Answer

1-2.
According to principal of "conservatism", gains should not be recognized when trading similar assets. The unrealized gain would be subtracted from the market value of the new equipment. So the entry would be:
Dr New Equipment (G) 74,500
Dr Accumulated Depreciation— Old Equipment (C) 30,000
Cr Old Equipment (G) 37,500
Cr Cash (E) 67,000

3-4.
Dr New Equipment (G) 60,000
Dr Accumulated Depreciation-Old Equipment (C) 30,000
Dr Loss on Disposal of Fixed Assets (J) 12,500
Cr Old Equipment (G) 47,500
Cr Notes Payable (K) 55,000

5-6.

R & D costs are expensed when incurred.
Dr Research and Development Expense (M) 40,000
Cr Cash (E) 40,000

7-8.
The loss is recognized
Dr Accumulated Depreciation-Equipment (C) 82,750
Dr Loss on Disposal of Fixed Assets (J) 1,000
Cr Old Equipment (G) 83,750

9-10.
As this is a straight sale and not a trade-in for similar assets, the gains are recognized.
Dr Cash (E) 5,000
Dr Accumulated Depreciation-Equipment (C) 55,000
Cr Equipment (G) 57,500
Cr Gain on Disposal of Fixed Assets (H) 2,500

11-12.
The loss is recognized:
Dr Accounts Receivable (A) 8,000
Dr Accumulated Depreciation-Equipment (C) 15,000
Dr Loss on Disposal of Fixed Assets (J) 9,000
Cr Equipment (G) 32,000

13-14.

Dr Depletion Expense (F) 18,500
Cr Accumulated Depletion (B) 18,500

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