REVISION OF ESTIMATES (10 Points) Osbourne Company purchased Equipment on January 1, 2015 at a cost of $110,000. The original Estimated Useful (Service) Life of the Equipment was twenty (20) years and the original Estimated Salvage (Residual) Value was $10,000. On January 1, 2019, Osbourne Company revised the total Estimated Useful (Service) Life (from the beginning) of the Equipment to ten (10) years and the Estimated Salvage (Residual) Value to S-O- (zero). Osbourne Company uses the Straight-Line Method to depreciate the Equipment. REQUIRED In the space provided below: (a) Compute the Depreciation Expense for the year of 2019. Make the Journal Entry as of December 31, 2019 to record the Depreciation Expense for the year of 2019. (Do not give explanation for the Journal Entry) SALE OF PLANT ASSET (10 Points) On January 1, 2020, Denee Company sold an old truck that was acquired by Denee Company on January 1, 2018 for $21,000 and had an Estimated Salvage (Residual) Value of $3,000 at the end of its Estimated Useful (Service) Life of six (6) years. Denee Company depreciated the old truck using the Straight-Line Method and Depreciation has been recorded through December 31, 2019 on the old truck. The old truck was sold by Denee Company on January 1, 2020 for $16,000. REQUIRED In the space provided below, prepare in GOOD FORM the following Journal Entries: (Do not give explanations for the Journal Entries) (a) Record the Depreciation Expense for the year of 2019 for the old truck. (b) Record the sale of the old truck. PAYROLL (10 Points) (Lot On AYNI PAYON The Cheryll Company's payroll for the week ending August 27, 2019 totaled $190,000 of Gross Earnings. None of the employees have reached the maximum earnings specified for Federal or State payroll taxes and withholdings or employer's Payroll Taxes. The following deductions were withheld from the employees' salaries: $41,700 Federal Income Taxes Social Security Taxes Medicare Taxes 2,755 . - FICA Taxes The Federal Unemployment Tax (FUTA) totaled $8,580 for Cheryll Company and the State Unemployment Tax (SUTA) totaled $3,200. The payroll (ie, payment to employees only) was actually paid by Cheryll Company on August 28, 2019. REQUIRED In the space provided below, prepare in GOOD FORM the following Journal Entries: (Do not give explanations for the Journal Entries) (a) To record the weekly payroll ending August 27, 2019. (b) To record the payment of the payroll (to the employees) on August 28, 2019. (c) To record (not pay) the employer's Payroll Tax Expense for the payroll. BONDS PAYABLE (10 Points) On January 1, 2019, Cheryll Company issued (sold) $2,500,000 of ten (10) year, twelve percent (12%) (Stated Interest Rate) Bonds. The Bonds were sold for $2,350,000 and pays interest on July 1 and January 1 of each year beginning on July 1, 2019. REQUIRED In the space provided below, prepare in GOOD FORM the following Journal Entries: (Do not give explanations for the Journal Entries) (a) The issuance (sell) of the Bonds Payable on January 1, 2019. (b) The first Semi-Annual Interest Payment on July 1, 2019 including any necessary amortization of Discount or Premium on Bonds Payable. Assume that the Market Interest Rate at the time of issuance of the Bonds was thirteen percent (13%)) -10
