Palmer Cook Productions manages and operates two rock bands. The company entered
ID: 2510806 • Letter: P
Question
Palmer Cook Productions manages and operates two rock bands. The company entered into the following transactions during a recent year. January 2 Purchased a tour bus for $96,000 by paying $34,000 cash and signing a $62,000 note due in two years. January 8 The bus was painted with the logos of the two bands at a cost of $350, on account. January 30 Wrote a check for the amount owed on account for the work completed on January 8. February 1 Purchased new speakers and amplifiers and wrote a check for the full $33,000 cost. February 8 Paid $250 cash to tune up the tour bus. March 1 Paid $34,000 cash and signed a $260,000 five-year note to purchase a small office building and land. An appraisal indicated that the building and land contributed equally to the total price. March 31 Paid $93,000 cash to acquire the goodwill and certain tangible assets of Kris’ Myth, Inc. The fair values of the tangible assets acquired were $23,000 for band equipment and $63,000 for recording equipment.
Complete the table below, indicating the account, amount, and direction of the effect (+ for increase and ? for decrease) for the above transactions. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.)
TIP: Goodwill is recorded as the excess of the purchase price over the fair value of individual assets.
Record the purchase of a tour bus for $96,000, paying $34,000 cash and financing the rest.
2
Record the painting charges of $350 on account.
3
Record the payment in full for the painting charges.
4
Record the purchase of speakers and amplifiers for $33,000 cash.
5
Record the cash expense of $250 incurred to tune up the tour bus.
6
Record the purchase of a small office building and land for $34,000 cash and $260,000 five year note.
7
Record the purchase of goodwill and tangible assets for $93,000 cash.
For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Palmer Cook Productions should report for the quarter ended March 31. For convenience, the equipment and vehicle are depreciated the same way, using the straight-line method with a useful life of five years and no residual value. The building is depreciated using the double-declining-balance method, with a 10-year useful life and residual value of $34,000. (Do not round intermediate calculations).
Record the depreciation expense for the three used machines at the end of the quarter.
Required:Explanation / Answer
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1. To record purchase of bus Date Account Title Debit Credit Jan.2 Vehicle 96000 Cash 34000 Note Payable 62000 2.To record the painting of the van Date Account Title Debit Credit jan.8 Vehicle 350 Accounts payable 350 3. To record the payment for the paintig job Date Account Title Debit Credit Jan.30 Accounts payable 350 350 Cash 4. To record purchase of speakers and amplifiers Date Account Title Debit Credit Feb.1 Equipment 33000 Cash 33000 5. To record the expese for tuning up the tour bus. Date Account Title Debit Credit Feb.8 Repairs to vehicle 250 Cash 250 6. To record purchase of land and ofice building Date Account Title Debit Credit Mar.1 Land 147000 Office Building 147000 Cash 34000 5-year Note payable 260000 7. To record purchase of music equipment Date Account Title Debit Credit Mar.31 Equipment 86000 Goodwill 7000 Cash 93000 8. To record depreciation expense for the first quarter. Date Account Title Debit Credit Mar.31 Depreciation Expense 8368 Accumulated Depreciation - Vehicle 4818 Accumulated Depreciation - Equipment 1100 Accumulated Depreciation - Office Building 2450Related Questions
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