Q 1. E9-1 - Molina Company - Instructions: Prepare journal entries for the transactions Information: Presented below are selected transactions of Molina Company. Molina sells in large quantities to other companies and also sells its product in a small retail outlet. March1 Sold merchandise on account to Dodson Company for $5,000, terms 2/10, n/30 Dodson Company returned merchandise worth $500 to Molina Molina collected the amount due from Dodson Company from the March 1 sale Molina sold merchandise for $400 in its retail outlet. The customer used his Molina credit card Molina added 1.5% monthly interest to the customers credit card balance.

A 1.

Q 2. E9-3 - Costello Company Instructions: Complete the 5 journal entries Information: The ledger of Costello Company at the end of the current year shows Accounts Receivable $110,000, Sales Revenue $840,000, and Sales Returns and Allowances $20,000. (a) If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Doles $1,400 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.

A 2.

Q 3. E10-7 - Linton Company Instructions: Different depreciation methods (a) Compute depreciation expense for 2014 and 2015 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (b) Assume that Linton uses the straight-line method. 1. Prepare the journal entry to record 2014 depreciation. 2. Show how the truck would be reported in the December 31, 2014, balance sheet. Information: Linton Company purchased a delivery truck for $34,000 on January 1, 2014. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2014 and 12,000 in 2015.

A 3.

Q 4. E10-11 - Friedman Inc. - Instructions: Prepare the journal entry to record depletion expense (a) Prepare the journal entry to record depletion expense. (b) Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported? Information: On July 1, 2014, Friedman Inc. invested $720,000 in a mine estimated to have 900,000 tons of ore of uniform grade. During the last 6 months of 2014, 100,000 tons of ore were mined and sold.

A 4.

Q 5. E10-12 - Pedigo Corporation Instructions: Prepare adjusting entries at December 31st to record amortization required Information: The following are selected 2014 transactions of Pedigo Corporation. Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. May 1Purchased for $75,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.

A 5.

Q 6. Buster Container Company is suffering from declining sales of its principal product, non-biodegradable plastic cartons. The president, Dennis Harwood, instructs his controller, Shelly McGlone, to lengthen asset lives to reduce depreciation expense (thus increasing net income). A processing line of automated plastic extruding equipment, purchased for $3.1 million in January 2010, was originally estimated to have a useful life of 8 years and a salvage value of $300,000. Depreciation has been recorded for 2 years on that basis. Dennis wants the estimated life changed to 12 years total, and the straight-line method continued. Shelly is hesitant to make the change, believing it is unethical to increase net income in this manner. Dennis says, Hey, the life is only an estimate, and I've heard that our competition uses a 12-year life on their production equipment. Who are the stakeholders in this situation? Is the change in asset life unethical, or is it simply a good business practice by an astute president? Discuss in detail.

A 6.