Required:Prepare all transaction journal entries and all related adjusting journal entries for Reagan Company related to the transactions throughout 2016. Reagan Company has a 38% income tax rate.

The following activity ocurred during the current year (2016) for Reagan Company:

1/18 Received building and land as a donation from the city. The building will be used in the business. The package had a fair market value of $922,000 on 1/18. Land typically represents about 18% of the cost when both a land and building are included in the purchase price. This building will be depreciated over 19 years using the sum-of-years-digit method and 6% salvage value.

2/13 Purchased a patent for $32,000 to protect a previous patent owned that has six years of legal life left and a book value of $14,500 (as of 12/31/15). The new patent will protect the value of the old one for only four remaining years as of 2/13/16.

3/1 Received an early payoff of 45% of a $285,000,2.29%,9-year Note Receivable recorded on 7/31/2011 in addition to interest owed annually on August 1st. On 7/31/11 the market rate of interest was 5.26%. Reagan receives a 1.47% early payment penalty on the carrying value of the portion of the loan being paid off early.

3/11 Transferred 75 shares of Gavin,Inc. stock held as an investment for a new printer. The stock is not a listed stock and last sold on January 19,2016 for $112 per share. The printer had a list price of $8,700. The stock was purchased in 2011 for $39 per share. (The printer has an estimated life of 5 years,estimated salvage value of 9% and will use double declining balance as the depreciation method).

3/26 Purchased a larger machine FOB shipping point. The purchase price is $124,670 but the vendo 3/15,n/45 early payment discount and placed on the railroad car later that same day. Reagan added the machine to their existing casualty insurance policy at an increased cost of $730 per year with the increase in insurance billed immediately. Reagan will use the sum-of-years digit method of depreciation over a 6-year life and estimates a 4% salvage value.

4/4 The machine arrived and testing began immediately. $650 of supplies were used to get the specifications correct and three employees who dedicated their entire 8-hour day to supervising the testing process. Two of the employees earn $22 per hour while their supervisor earns $34 per hour.

4/19 Reagan decided not to pay for the machine purchased on 2/26 due to reduced cash flow,but will pay entire balance due on the 45-day due date.

4/26 An unsuccessful defense of a trademark cost the company $18,000 in legal fees and $2,690 in court costs. The trademark we were attempting to defend has a remaining book value of $18,600, an original cost of $38,000 and a remaining legal life of 6 years (at 12/31/15).

5/28 Sell 2 of the remaining 10 computers for $567 each. Ten of these computers were purchased for $1,040 each on January 1,2014 and are being depreciated using the group depreciation method using straight line depreciation over 5 years.

7/25 Reagan traded in a 2-year old car that had an historical cost of $38,000 and accumulated depreciation of $19,200 (the car was depreciated over 5 years using straight line depreciation and an estimated salvage value of $2,900). Reagan also paid cash boot of $16,600. The new car had a list price of $42,400 and the market value of the trade-in is not known. This exchange has commercial substance. (new car has estimated 5-year life, sum-of-years-digit,salvage value $8,500)

8/30 An error was discovered relating to a transaction on January 19th of last year. A $4,900 copy machine was purchased and was recorded as a $4,900 supply expense when it should have been capitalized over a 4-year life using 150% declining balance.

9/30 Reagan Company purchased the net assets of Aaron Company for $970,000 after which Aaron was liquidated. The book and fair values of net assets are as follows: current assets:$200,000 ($210,000);Property Plant and Equipment:$750,000($940,000);liabilities:$260,000(260,000). (All Property Plant and Equipment has life of 15 years, straight line $0 salvage).

10/1 Reagan Company bought a building by signing a 12 year 3% note for $690,000 in addition to paying $93,600 down. The current market interest rate is 6.72%. (building 28-year straight line, salvage value 4%)

12/31 The goodwill has a market value on December 31st of $71,200.