Followings are selected transactions for Mona Enterprise for 2020:

Jan1Received $2,500 scrap value on retirement of machinery that was purchased on January 1, 2008. The machine cost $85,000 on that date and had an estimated useful life of 9 years with no residual value.

April 30 Sold a printing machine for $55,000 that was purchased on January 1, 2015. The printer cost $90,000 and had an estimated useful life of 10 years with no residual value.

Dec 31Disposed of a business automobile that was purchased on September 1, 2014. The car cost $24,800 and was depreciated on an 8-year useful life with a residual value of $800.

Instructions

Journalize all entries required as a result of the above transactions. Mona Enterprise uses the straight-line method of depreciation and has recorded depreciation up to December 31, 2019.

QUESTION 2 (7 marks):

Blue Properties Co. paid $6,000 for property taxes in year 2018 calendar year. In 2019, Blue receives its property tax bill on May 1 for $7,200 which is payable on June 30, 2019.

Instructions

Calculate the prepaid or property taxes payable that Blue will report on its balance sheet if Blue Properties Co. year end is

a)February 28, 2019

b)May 31, 2019

c)September 30, 2019

d)December 31, 2019

QUESTION 3 (11 marks):

An inexperienced accountant for Transport Kanada Ltd. recorded the following transactions in the records of the company for the year ended December 31, 2019. The controller has questioned the appropriateness of the entries since she thinks that they have not been recorded in accordance with generally accepted accounting principles. Profit for the year, including the entries described below, is $95,000.

1.On January 1, the company president, an owner of the company, took a personal vacation and the trip cost $2,600. The accountant recorded the entry as follows:

Travel Expense................................................................................ 2,600

Accounts Payable..................................................................... 2,600

2.The company purchased on account a wastebasket on December 31 at a cost of $95. The accountant made the following entry:

Office Equipment.............................................................................. 95

Accounts Payable...................................................................... 95

3.Merchandise inventory which cost $15,000 had a current net replacement value of $20,000. The accountant made the following entry as a result:

Merchandise Inventory..................................................................... 5,000

Gain on fair value adjustment................................................... 5,000

4.Equipment with a fair market value of $12,000 was acquired in a liquidation sale for cash at a cost of $8,000. The accountant recorded the transaction as follows:

Equipment......................................................................................... 12,000

Cash.......................................................................................... 18000

Gain on fair value adjustments.................................................. 4,000

5.Transport Kanada uses the allowance method.A customer's account receivable for $9,000 was uncollectible and the following entry was made:

Bad Debts Expense.......................................................................... 9,000

Accounts Receivable................................................................. 9,000

QUESTION 4 (12 marks) :

The shareholders' equity section of Simpson Limited at December 31, 2018 included the following:

$4 preferred shares, cumulative,

20,000 shares authorized; 5,000 shares issued.................................................. $500,000

Common shares, 300,000 shares authorized,

100,000 shares issued......................................................................................... $1,000,000

Dividends were not declared on the preferred shares and are in arrears since 2016.

On September 15, 2019, the board of directors of Simpson Limited declared dividends on the preferred shares for 2016, 2017, and 2018, to shareholders of record on October 1, 2019, payable on October 15, 2019.

On November 1, 2019, the board of directors declared a $1.50 per share dividend on the common shares, payable November 30, 2019, to shareholders of record on November 15, 2019.

Instructions

Prepare the journal entries that should be made by Simpson Limited in 2019 on the dates indicated below:

September 15November 1

October 1November 15

October 15November 30