working accounting problems example go to accounting toolbox for success print the martin corp....
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![Page 1: Working Accounting Problems Example Go to Accounting Toolbox for Success Print the Martin Corp. problem Refer to it as you view this module](https://reader036.vdocuments.site/reader036/viewer/2022062318/5516ad6c550346f6208b50ff/html5/thumbnails/1.jpg)
Working Accounting Problems Example
• Go to Accounting Toolbox for Success• Print the Martin Corp. problem• Refer to it as you view this module
![Page 2: Working Accounting Problems Example Go to Accounting Toolbox for Success Print the Martin Corp. problem Refer to it as you view this module](https://reader036.vdocuments.site/reader036/viewer/2022062318/5516ad6c550346f6208b50ff/html5/thumbnails/2.jpg)
R O W E RR O W E R
•Requirements•Organize•Work•Evaluate•Review
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Requirements
(1) Prepare journal entries
(a)for the purchase of the equipment on 12/1/X0
(b) for any necessary adjustments on 4/30/X1
Round all computations to the nearest dollar
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Requirements
Cost and Matching Principles
JE for Asset Acquisition
Adjusting Entries
Computations: Interest Straight Line Depreciation
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Requirements
(2) How does this appear on the 4/30/X1 Balance Sheet andon the Income Statement for the year ended 4/30/X1?
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Requirements
Balance Sheet Accounts
Balance Sheet Presentation
Income Statement Accounts
Income Statement Presentation
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Requirements
(3) Assume that the accountant does not make the adjusting entry for the accrual of interest. How does this error impact the financial statements?
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Requirements
Matching Principle
Effects of errors on the Balance Sheet
Effects of errors on the Income Statement
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Organize
Facts
Accounting Period: 5/1/X0 – 4/30/X1
Cost of Equipment: $100,000
Signed Note: $80,000, 1yr, 8% interest
Purchase Date: 12/1/X0 Paid $20,000
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Organize
Facts
No salvage value at the end of 5 years
Straight Line Depreciation
5 year estimated life
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Organize
Watch for facts that are not needed
$125,000 recent selling price
Tax method of depreciation
Cost Principle – record at amount paid
Work with the financial method
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Organize
Action Plan
Paper and pencil, calculator
Work one requirement at a time
Label your work, save your work, finish the assignment and be neat
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Work – Requirement (1) (a)
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Work – Requirement (1) (b)
$100,000/5 yrs = $20,000 depreciation per yr
$20,000 X 5/12 ≈$8,333
Round to the nearest dollar
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Work – Requirement (1) (b)
$80,000 X .08 X 5/12 ≈ $2,667
Round to the nearest dollar
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Work – Requirement (2)
Martin Corporation Balance Sheet April 30, X1
AssetsProperty, Plant and Equipment
Equipment $100,000Less Accumulated Depreciation (8,333) $ 91,667Book Value or Carrying Value
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Work – Requirement (2)
Martin Corporation Balance Sheet April 30, X1
Current Liabilities
Interest Payable $2,667 Notes Payable $80,000
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Work – Requirement (2)
Martin Corporation Income Statement For the Year Ended April 30, X1
Expenses
Depreciation $8,333
Interest 2,667
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Work – Requirement (3)
Net Income is too high because $2,667 of Interest Expense was not recorded
Net Income is overstated by $2,667 Current Liabilities are understated by $2,667
Current Liabilities are too low because $2,667 of Interest Payable was not recorded
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Evaluate
Determine how to receive feedback
Make corrections
Learn from your mistakes
Ask for clarification
I am ready for the next chapter and the exam
I am ready for the next chapter and the exam
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Review
Process
Results
Foundation
Can you improve?
Are you ready for the next assignment?
Do you understand?
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Working Accounting ProblemsWorking Accounting Problems
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