Stern Corporation (A) Essay

August 21, 2017 History

Individuel Case Study
After the accountant of Stern Corporation had ascertained the alterations in histories receivable and the allowance for dubious histories in 1998. a similar analysis was made of belongings. works. and equipment and accumulated depreciation histories. Again the accountant examined the December 31. 1997. balance sheet [ see Exhibit 1 of Austere Corporation ( A ) ] . Besides reviewed were the undermentioned company minutess that were found to be applicable to these histories: 1. On January 2. 1998. one of the mill machines was sold for its book value. $ 3. 866. This machine was recorded on the books at $ 31. 233 with accrued depreciation of $ 27. 367. 2. Tools were carried on the books at cost. and at the terminal of each twelvemonth a physical stock list was taken to find what tools still remained.

The history was written down to the extent of the lessening in tools as ascertained by the year-end stock list. At the terminal of 1998. it was determined that there had been a lessening in the tool stock list amounting to $ 7. 850. 3. On March 1. 1998. the company sold for $ 2. 336 hard currency an car that was recorded on the books at a cost of $ 8. 354 and had an accrued depreciation of $ 5. 180. giving a net book value of $ 3. 174 as of January 1. 1998. In this and other instances of the sale of durable assets during the twelvemonth. the accrued depreciation and depreciation disbursal points were both increased by an sum that reflected the depreciation chargeable for the months in 1998 in which the plus was held prior to the sale. at rates listed in 7 below. 4. The patent listed on the balance sheet had been purchased by the Stern Corporation on December 31. 1987. for $ 168. 750.

This patent had been granted on December 31. 1985. The cost of the patent was to be written off as an disbursal over the balance of its legal life. ( The legal life of a patent is 17 old ages from the day of the month granted. ) 5. On July 1. 1998. a typewriter that had cost $ 1. 027 and had been to the full depreciated on December 31. 1997. was sold for $ 75. 6. On October 1. 1998. the company sold a desk for $ 80. This piece of furniture was recorded on the books at a cost of $ 490 with an accrued depreciation of $ 395 as of January 1. 1998. 7. Depreciation was calculated at the undermentioned rates:

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Buildings………………………… | 2 % |
Factory machinery…………… . . | 10* |
Furniture and fixtures………… | 10 |
Automotive equipment……… . . | 20 |
Office machines………………… | 10 |
8. Included in the mill machinery cost of $ 3. 425. 585 was a machine bing $ 85. 000 that had been to the full depreciated on December 31. 1997. and that was still in usage. Assignment
1. In a mode similar to that used in Austere Corporation ( A ) . analyse the consequence of each of these minutess on the belongings. works. and equipment histories. accumulated depreciation. and any other histories may be involved ; prepare journal entries for these minutess. Austere Corporation ( B ) Overview Issues:





* In Dec 31. 2010. the company reviewed certain minutess applicable to histories receivable which are as followed: * Gross saless during 2010 amounted to $ 9. 965. 575
* Payments received during 2010 – $ 9. 685. 420
* During the twelvemonth A/C rec. numbering $ 26. 854 were w/o
* Two histories were w/o in 2009 were collected in 2010
* One history for 2108 was paid in full
* Partial payment of 1566 was made and the original sum was 2486 * Allowance for bad debt to was adjusted as 3 % of the balance in history receivable at the terminal of the twelvemonth




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