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1. Prepare journal entries (including any necessary adjusting entries on December 31) for each of the following transactions because your company forgot to record
1. Prepare journal entries (including any necessary adjusting entries on December 31) for each of the following transactions because your company forgot to record any of them. Indicate the appropriate dates for each of your journal entries. Remember that your company was in a 25% tax bracket for 2020 and a 28% tax rate in 2021. You do not need to make an entry to record income taxes, but you must remember to change the amounts of income taxes on your financial statements. Show all journal entries to the nearest PENNY (which means EVERY journal entry should have 2 decimals whether the correct amount is $100.0000 or $305.6287498). Please print your journal entries, including any related adjusting entries (or upload your spreadsheet to D2L) on December 31, 2021, for part "a." below, followed by all entries for part "b." below, etc. You do NOT have to put all of the entries in chronological order. a. On March 1, 2021, your company exchanged equipment which cost $31,000 and had a book value of $15,000 for another piece of equipment and RECEIVED $3,000 in cash. The old equipment had a fair value of $14,000. The new equipment had a fair value of $11,000. You use 150% declining balance method on this type of equipment. The new equipment had an estimated life of five years and an estimated salvage value of $700. b. Your company has recorded depreciation on all of your other equipment except one large machine. The equipment omitted was originally purchased on April 1, 2018 for $17,000. The equipment had an estimated life of six years and an estimated salvage value of $2,300. Your company was using sum of the years' digits method of depre- ciation. On August 1, 2021 (THIS year), your company switched to the straight-line method of depreciation and changed the estimated salvage value from $2,300 to $500. c. On December 31, 2021, (AFTER recording this year's amortization), you tested the franchise and the patent for impairment. You estimated future cash flows from the franchise would be approximately $90,000 in total for the remaining 9 years of the franchise agreement. You estimated future cash flows from the patent would be a total of $1,500. The fair value of the franchise is estimated to be $75,000 and the fair value of the patent was $1,400. d. On January 1, 2021, you purchased 25% of the outstanding common stock of Tiny Company for $6,700 in cash and plan to exercise significant influence over Tiny. On the acquisition date, Tiny's merchandise had a book value $800 higher than its market value (FIFO system) and their patent had a book value $1,000 lower than its market value (with a five year remaining life). On December 1, 2021, you received $75 of cash dividends from Tiny. On December 31, 2021, Tiny Company reported $2,000 of net income for the ENTIRE year and your shares of Tiny Company had a market value of $7,000. e. On April 1, 2021, your company received $200 in cash dividends from the Available for Sale Securities. The $42,000 of Available for Sale Securities on your balance sheet on December 31, 2021, consisted of: Stocks of other companies Bonds of other companies $12,000 book value and $13,600 market value $30,000 book value and $30,000 market value
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