Please record the adjustments in the first two preformatted worksheets to the appropriate columns. If the numbers do not add up please still add them in. You may have to click on the photos to see the whole document. Or simply type out which category each journal entry will go in for example (accounts receivable, &cash). You do not have to place it in the excel document

1 Okay, let's get depreciation out of the way first. Let's pretend Merck uses both straight-line and

double declining balance (DDB) depreciation methods. Let's assume it uses DDB for Buildings and

and straight-line for Machinery, equipment and office furnishings. Land and Construction in progress

are not depreciated. Assum $9,600 of accumulated depreciation is associated with Buildings and the

remainder ($8,086) is associated with Machinery, equipment and office funishings. Further assume that

Buildings have a depreciable life of 23 years. Assume Machiery, equipment and office furnishings has a

6-year life and $900 salvage value. Please record depreciation.

2 Some office furnishings were sold for $1,550 cash. The office furnishings had a cost of $2,600 and had been

depreciated $1,900. Record the sale.

3 Purchased laboratory equipment for $230. Additional costs included freight of $2, labor to install the

equipment $3, labor to calibrate the equipment $1. Cash of $150 was paid and the rest was financed with a

long-term loan.

4 Made extensive expenditures to improve laboratory machinery $6. These expenditures doubled the

productivity of the machinery. Cash was paid.

5 Made significant expenditures to repair old buildings, $11, paid in cash. These repairs did not "improve"

the buildings or increase their life.

6 Buildings were lost in a fire. The cost of the buildings was $160 and they had been depreciated $110.

Insurance paid for $38, received in cash.

7 Merck developed several new pharmaceitical medicines, and successfully patented the medicines for

several years, cost of the patents was $9, paid in cash.

8 Merck developed a new logo for its brand and had the logo trademarked, paying $4 cash.

9 Merck purchased another pharmaceutical company, for cash. The net assets (assets minus liabilities)

acquired were, at their fair market values, accounts receivable $24, inventories $180, other current assets $15,

buildings $860, trade accounts payable $19, long-term debt $200. Merck paid $1,600 cash for this

company.

10 Intangible asset amortization was $990. Please record this amortization.

11 Let's talk about something new, Deferred Income Taxes, shown as a liability on Merck's balance sheet.

Deferred income taxes are created when there are timing differences between when a revenue or expense is

recognized by a company on its financial statements and when the item is taxable as income or an expense

for tax purposes. Overall the income or expense will be the same for both tax and financial statement

purposes; the difference is the year in which it is shown as a revenue or expense for financial

purposes will differ from when it is expensed or a revenue for tax purposes. When Deferred income taxes

is an asset, it means that there are future tax benefits due to these timing differences. When Deferred

income taxes is a liability, it means that there will be additional taxes to be paid in the future due to these

timing differences. Okay, enough about that. Assume that the 2019 tax return (form 1120) was filed,

and that it was determined that due to timing differences, the Deferred income tax liability should

increase $30. Please record this, and record the income statement effect in Taxes on Income.

12 Pharmaceutical sales of $3,800 were made, for cash. Cost of the items sold was $800.

13 Wages were paid, $570, cash.

14 Cash dividends paid were $3,400. $1,587 was liquiditing the Dividends payable on the balance sheet (this is

a dividend that was declared sometime earlier but not paid at that time) and the rest was this year's

declared dividend and is a reduction of retained earnings.

15 Paid Loans payable and current portion of long-term debt of $1,000, plus interest on these loans of

$200, total cash paid was $1,200.

 

Current Liabn Merck & Co, Inc. Balance Sheet December 31, 2019 (Amount in &millions) ASSETS Current Assets 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Updated Cash and cash equivalents 9,676 9,676 Short-term investments 774 774 Accounts receivable (net of allowance for doubtful accounts of $86) 6,778 6,778 Inventories 5,978 5,978 Other current assets 4,277 4,277 Total Current Assets 27,483 27,483 Investments 1,469 1,469 Property and equipment (at cost) Land 343 343 Buildings 11,989 11,989 5 204 15,394 Machinery, equipment and office furnishings Construction in progress Less - accumulated depreciation Goodwill Other Intangibles, Net Other Assets 15,394 5,013 5,013 17,686 17,686 19,425 19,425 14,196 14,196 6,771 6,771 Total Assets 84,397 84,397 LIABILITIES AND EQUITY Current Liabilties Loans payable and current portion of long-term debt Trade accounts payable 3,610 3,610 3,738 3,738 Accrued and other current liabilities 12,549 12,549 Income taxes payable 736 736 1,587 22,220 22,736 Divident payable 1,587 Total Current Liabilities Long-Term Debt Deferred Income Taxes 22,220 22,736 1,470 11,970 1,470 11,970 Other Noncurrent Liabiilities Merck & Co, Inc. Stockholders' Equity Common stock, $.50 par value Orher naid-in capital Other paid-in capital Retained earnings 1,788 39,660 1,788 39,660 46,602 46,602 Accumulated other comprehensive loss (6,193) (6,193) Lesstreasury stock, at cost, 1,038,087,496 shares Total Merck & Co, Inc. stockholders' equity 55,950 55,950 25,907 25,907 Noncontrolling interests 94 94 Total equity 84,397 84,397