Flaherty Company had the following two transactions related to its delivery truck. 1. Paid $45 for an oil change. Paid $400 to install special gear unit, which increases the operating efficiency of the truck. 2. Prepare Flaherty's journal entries to record these two transactions. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter o for the amounts.) No Account Titles and Explanation Debit Credit 1. 2. Chisenhall Company purchased land and a building on January 1, 2022. Management's best estimate of the value of the land was $100,000 and of the building $200,000. However, management told the accounting department to record the land at $220,000 and the building at $80,000. The building is being depreciated on a straight-line basis over 15 years with no salvage value. Calculate the annual change in net income $ Why do you suppose management requested this accounting treatment? Is it ethical? It is likely that management requested this accounting treatment and this practice is to increase the depreciation expense to reduce the net income to boost the net income to decrease the depreciation expense Gunkelson Company sells equipment on September 30, 2022, for $18,000 cash. The equipment originally cost $72,000 and as of January 1, 2022, had accumulated depreciation of $42,000. Depreciation for the first 9 months of 2022 is $5,250. Prepare the journal entries to (a) update depreciation to September 30, 2022, and (b) record the sale of the equipment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) Olathe Company exchanges old delivery equipment for new delivery equipment. The book value of the old delivery equipment is $31,000 (cost $61,000 less accumulated depreciation $30,000). Its fair value is $24,000, and cash of $5,000 is paid. Prepare the entry to record the exchange, assuming the transaction has commercial substance. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Include in your journal entry separate account entries for both the new and old equipment.) Account Titles and Explanation Debit Credit Benedict Company incurred the following costs. Indicate to which account Benedict would debit each of the costs. No. Transactions Account 1. Sales tax on factory machinery purchased $5,000 2. Painting of and lettering on truck immediately upon purchase 700 3. Installation and testing of factory machinery 2,000 Advertising Expense Equipment Tax Expense Land Insurance Expense Architect's Fees Prepaid Insurance Buildings Land Improvements Repairs and Maintenance Expense 4. Real estate broker's commission on land purchased 3,500 5. Insurance premium paid for first year's insurance on new truck 880 6. Cost of landscaping on property purchased 7,200 7. Cost of paving parking lot for new building constructed 17,900 8. Cost of clearing, draining, and filling land 13,300 9. Architect's fees on self-constructed building 10,000
