Panes Accounting Policies, Procedures and Other Relevant Facts A Pane uses the allowance method for receivables, the percentage of credit sales method to determine uncollectible accounts, and has a perpetual inventory system B Depreciation is computed using the double declining balance method Amortization is computed using the straight line method C All purchases and expenses are on account unless otherwise indicated D Pane's income tax rate is 30 E All of the property, plant and equipment on the balance sheet as of 1 1 2021 is fully depreciated Therefore, the only depreciation for the current year will relate to property, plant and equipment that Pane has purchased during the current year F 500,000 shares of stock are outstanding as of 12 31 2021 Pane in the Glass, Inc Transactions for the Year Ended December 31, 2021 On December 31, Pane evaluates its salary information for the year The company incurred salary expense totaling $8 7 million dollars during the year Of this amount, $8 3 million was paid out in cash during the year, and the remaining amount will be paid in the following year On December 31, Pane evaluates the companys research and development (R D) activities conducted throughout the year to help develop a new bullet proof glass for the Department of Defense Management determines that the company incurred the following costs related to the R D activities Material used from inventory $95,000 Wages and Salaries (paid in cash) $151,000 Machine purchased for cash for the R D project with a useful life of 1 year and no alternative future uses $47,000 Pane in the Glass, Inc Additional Information Available at Year End On December 31, 20X1 Pane accrues interest on the note signed by Gane on April 1 (see Transaction 4) Assume interest is assessed based on number of months the note was outstanding during the year Pane believes that 1 of its net credit sales will be uncollectible for the year Net credit sales amounted to $71,250,000 Pane increases the allowance for doubtful accounts based on this analysis Pane uses the first in, first out (FIFO) cost flow assumption At year end, Pane determines an inventory write down of $27,000 is necessary Assume that Pane records inventory write downs directly to cost of goods sold, as opposed to a separate loss account Pane records depreciation and amortization expense Use the double declining balance method for depreciation and the straight line method for amortization Note that all assets on the books at the beginning of the year are fully depreciated, so you only need to record depreciation and amortization for the following 3 items from the current year Use the accumulated depreciation and accumulated amortization accounts From item 1 above, a building was acquired for 196,667 with a residual value of 20,000 and a useful life of 20 years From item 3 above, a piece of machinery was acquired for 128,206 with no residual value and a useful life of 6 years ( hint only a partial year of depreciation will be recorded since it is not acquired at the beginning of the year ) From item 7 above, a patent was acquired for $120,000 with a useful life of 12 years ( hint only a partial year of amortization will be recorded since it is not acquired at the beginning of the year ) Pane purchased a subsidiary many years ago that produces various specialty medical glass products and named it PaneMeds, which invested heavily in an artificial jaw replacement, GlassJaw Due to inferior durability, the market reacted negatively to the product and Pane decided to review the PaneMeds operating segment for impairment to goodwill Based on this analysis, a goodwill impairment of 100,000 needs to be recognized Income tax expense was recognized as 30 of the pre tax net income amount of $28,150,921 The cash tax payment will not be remitted until the following year Journal Entries Account No and Account Title Combined Transaction No Date DR 11 December 31 Dr 12 December 31 Der 13 December 31 Dr c 14 December 31 Dr 15 December 31 Dr 16 December 31 Dr December 31 Dr December 31 Dr or 17 December 31 Dr Cr 18 December 31 Dr or Journal Entries Account No and Account Title Combined Transaction No Date DR 11 December 31 Dr 12 December 31 Der 13 December 31 Dr c 14 December 31 Dr 15 December 31 Dr 16 December 31 Dr December 31 Dr December 31 Dr or 17 December 31 Dr Cr 18 December 31 Dr or

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Panes Accounting Policies, Procedures and Other Relevant Facts A- Pane uses the allowance method for receivables, the percentage of credit sales method to determine uncollectible

Panes Accounting Policies, Procedures and Other Relevant Facts

A- Pane uses the allowance method for receivables, the percentage of credit sales method to determine uncollectible accounts, and has a perpetual inventory system.

B- Depreciation is computed using the double-declining balance method. Amortization is computed using the straight-line method.

C- All purchases and expenses are on account unless otherwise indicated.

D- Pane's income tax rate is 30%.

E- All of the property, plant and equipment on the balance sheet as of 1/1/2021 is fully depreciated. Therefore, the only depreciation for the current year will relate to property, plant and equipment that Pane has purchased during the current year.

F- 500,000 shares of stock are outstanding as of 12/31/2021

Pane in the Glass, Inc. Transactions for the Year Ended December 31, 2021:

On December 31, Pane evaluates its salary information for the year. The company incurred salary expense totaling $8.7 million dollars during the year. Of this amount, $8.3 million was paid out in cash during the year, and the remaining amount will be paid in the following year.

On December 31, Pane evaluates the companys research and development (R&D) activities conducted throughout the year to help develop a new bullet proof glass for the Department of Defense. Management determines that the company incurred the following costs related to the R&D activities:

Material used from inventory		$95,000
Wages and Salaries (paid in cash)		$151,000
Machine purchased for cash for the R&D project with a useful life of 1 year and no alternative future uses		$47,000

Pane in the Glass, Inc. Additional Information Available at Year-End

On December 31, 20X1:

Pane accrues interest on the note signed by Gane on April 1 (see Transaction #4). Assume interest is assessed based on number of months the note was outstanding during the year.

Pane believes that 1% of its net credit sales will be uncollectible for the year. Net credit sales amounted to $71,250,000. Pane increases the allowance for doubtful accounts based on this analysis.

Pane uses the first-in, first-out (FIFO) cost flow assumption. At year-end, Pane determines an inventory write-down of $27,000 is necessary. Assume that Pane records inventory write-downs directly to cost of goods sold, as opposed to a separate loss account.

Pane records depreciation and amortization expense. Use the double declining balance method for depreciation and the straight-line method for amortization. Note that all assets on the books at the beginning of the year are fully depreciated, so you only need to record depreciation and amortization for the following 3 items from the current year. Use the accumulated depreciation and accumulated amortization accounts.

From item 1 above, a building was acquired for 196,667 with a residual value of 20,000 and a useful life of 20 years.
From item 3 above, a piece of machinery was acquired for 128,206 with no residual value and a useful life of 6 years (hint: only a partial year of depreciation will be recorded since it is not acquired at the beginning of the year).
From item 7 above, a patent was acquired for $120,000 with a useful life of 12 years (hint: only a partial year of amortization will be recorded since it is not acquired at the beginning of the year).

Pane purchased a subsidiary many years ago that produces various specialty medical glass products and named it PaneMeds, which invested heavily in an artificial jaw replacement, GlassJaw. Due to inferior durability, the market reacted negatively to the product and Pane decided to review the PaneMeds operating segment for impairment to goodwill. Based on this analysis, a goodwill impairment of 100,000 needs to be recognized.

Income tax expense was recognized as 30% of the pre-tax net income amount of $28,150,921. The cash tax payment will not be remitted until the following year.

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