Monday, February 22nd, 1999
Announcements: none

Lecture notes:

8. To be competitive and to increase sales.
9. It makes no attempt to match revenues and expenses.

11. No.

18. An unconditional promise to pay a definite sum of money on demand or at a future date. The maker is the one who pays money to the payee.

6.

Uncollectible Accounts Expense		27,700
	Allowance for Uncollectible Accounts		27,700

8.

5/31	Allowance for Uncollectible Accounts			4,400
		Accounts Receivable			4,400
8/13	Accounts Receivable			1,000
			Allowance for Accounts Receivable		1,000
	Cash			1,000
			Accounts Receivable		1,000

9.

Date is September 13

5,000 x 6% x 3/12 + 5,000 = $5,075

6.

Uncollectible Accounts Expense		70,700
	Allowance for Uncollectible Accounts		70,700
Balance = $87,900

12.

a) $570	c) $135	e) $108
b) $320	d) $1,500

14.

12/1	Notes Receivable			5,000
		Sales			5,000
12/31	Interest Receivable			50
		Interest Income			50
3/1	Cash			5,150
			Notes Receivable		5,000
			Interest Receivable		50
			Interest Income		100

Chapter 10 Homework

1. They have a useful life of more than one year, they are acquired for use in the operation of a business, and they are not intended for resale to customers.

3. Because it has an unlimited life.
4. Depreciation is the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life. Depletion refers to depreciation of natural resources and amortization refers to depreciation of intangible assets.

7. Capital Expenditures are used to purchase and expand long-term assets and revenue expenditures are used for their maintenance. Costs and expenditures are included in the cost of long term assets.

9. No, there was no gain on construction.

8. It may wear out farther that they expected.

13. No, it is more to estimate how much value you'll get out of the equipment.

15. Most equipment is more efficient when new and so provides more and better service in the earlier years.

17. By it's book value at that time.

2.

1) b	3) a	5) c	7) c
2) c	4) a	6) b	8) c

4. $1,250 per year

5.

Year 1 = $1,500

Year 2 = $1,250

Year 3 = $1,375

Year 4 = $875

6.

	DE		BV
Equipment		5,500
Year 1	2,750	2,750
Year 2	1,375	1,375
Year 3	687.50	687.50
Year 4	187.50	500

7.

1)	Loss			3,600
	Accumulated Depreciation			4,500
		Equipment			8,100
2)	Cash			1,500
	Loss			2,100
	Accumulated Depreciation			4,500
			Equipment		8,100
3)	Cash			4,000
	Accumulated Depreciation			4,500
			Gain		400
			Equipment		8,100

9.

Ore Depletion = $1.70 per ton

First Year = $1,020,000

Machines = $1,200,000 per year

4.

Cost = $20,000

Depletion = $3,000

5.

1) $7,500

2) $9,000

3) $10,800

Depletion Expense		10,800
	Accumulated Depreciation		10,800

6.

	AD		BV
Cost		4,480
Year 1	2,240	2,240
Year 2	1,120	1,120
Year 3	560	560
Year 4	80	480

7.

1)	Loss		14,400
	Accumulated Depreciation		18,000
		Equipment		32,400
2)	Cash		6,000
	Accumulated Depreciation		18,000
	Loss		8,400
		Equipment		32,400
3)	Cash		18,000
	Accumulated Depreciation		18,000
		Gain		3,600
		Equipment		32,400