Palmer Cook Music Productions manages and operates two bands. The company entered into the following transactions during a recent year.

Required:

1. Analyze the accounting equation effects and record journal entries for each of the transactions.

2. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Palmer Cook Music 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 $20,000.

3. Prepare a journal entry to record the depreciation calculated in requirement 2.

Transcribed Image Text:

Purchased a tour bus for $80,000 by paying $20,000 cash and signing a $60,000 note due in two years. January 2 January 8 The bus was painted with the logos of the two bands at a cost of $350, on account. Wrote a check for the amount owed on account for the work completed on January 8. January 30 February 1 Purchased new speakers and amplifiers and wrote a check for the full $12,000 cost. February 8 Paid $250 cash for minor repairs to the tour bus. Paid $20,000 cash and signed a $190,000 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 1 Paid $90,000 cash to acquire the goodwill and certain tangible assets of Kris Myth, Inc. The fair values of the tangible assets acquired were $20,000 for band equipment and $60,000 for recording equipment. March 31