CASE 7-1 STERN CORPORATION (B) Presented by GROUP 1: Afif Saipudin | 140-651-3104 Agung | 140-658-3110 Ahmad Purbaya | 140-658-8534 Ariston Tjendra Tjendra | 140-651-3306 Camelia Indah Murniwati | 140-651-3376 • • • • •
Accounting For Managers – F141 – MMUI
Exhibit 1 STERN CORPORATION Balance Sheet As of December 31, 2009 2009 Liabilities and Shareholders' Equity
Assets
Current liabilities:
Current assets:
Ca s h Accounts receivable Less: Al Al lo lowance fo for do doubtful ac accounts U.S. Treasury securi ties at cost Inventories Total current assets
$
$
671,344
$
958,609 274,060 1,734,405 3,638,418
988,257 29,648
$
412,294 186,563
2,405,259 663,379 3,425,585 1,642,358 56,484 40,400 58,298 37,156 42,534 28,005
1,741,880 1,783,227 16,084 21,142 14,529 61,294 56,250 100 190
510,000 709,354 141,478 69,300 1,430,132
Noncurrent liabilities: liabilities:
Long-term debt
Other assets:
Investments Land Buil ding Less: Accumul ated depreciation Factory machi nery Less: Accumul ated depreciation Furni ture and fix tures Less: Accumul ated depreciation Automotive equipment Less: Accumul ated depreciation Office machines Less: Accumul ated depreciation Tools Patent Prepaid Expense
Accounts payable Taxes payable Accrued salaries, wages, and interest Long-term debt, due within one year Total current liabilities
1,247,368
Shareholders' equity:
Common stock Retained earnings Total shareholders' equity Total liabilities and shareholder's equity
$
2,503,275 2,851,096 5,354,371 8,031,871
Company Transaction 1.
2.
Journa Journall 1 - 2
2010, one of the factory machine machiness was On January 2, 2010 was sold for its book value, $3,866. This machine was recorded on the books at $31,233 with accumulated depreciation of $27,367. Factory Machines Machines,, at cost
31,233
Acc. Depreciation Factory Machines, net Sold Loss/gain on sales
27,367 3,866 3,866 -
Tools were carr carrie ied d on the books at cost, cost, and at the end of eac e ach h year a physical inve inventory ntory was taken to determine what tools still sti ll remained. The account account was was written down to the extent exte nt e nd of 2010 2010, it was of the decrease in tools as ascertained ascertained by the year-end inventory. At the end determined that there had been a decrease in the tool inventory amounting to $7,850. Tools Acc. depreci ati on
7,850
Company Transaction 3.
Journal 3
On March 1, 2010 an automobile that was recorded on the 2010, the company sold for $2,336 cash an books at a cost of $8,354 and had an accumulated depreciation of $5,180, giving a net book January 1, 201 2010. 0. In this this and other cases cases of the sale of long-li l ong-lived ved assets value of $3,174 $3,174 as of January during the year, the accumulated accumulated depreciation and depreciation depreciation expense e xpense items were we re both increased by an amount that reflected the depreciation chargeable for the months in 2010 in which the asset was hel held d prior to the sale, at rates rates li sted in item i tem 7 below. Automobi l e, at cost Acc. Depreci ati on ( Jan 1,2010)
8,354 5,180
Automobi l e, net (Jan 1, 2010) Acc. Depreci ati on ( March 1,2010) Automobi l e, net (March 1, 2010)
3,174 5,458 2,896
Sol d
2,336
Loss/gai n on sal es
( 560)
Depreciation Expense for 2 months (Jan-Feb) = 2/12 * (depreciation rate*cost) = 2/12 * (20%*8354) = 278 Accumulated Depreciation Dep reciation (Mar ( March ch 1, 2010)
= Accumulated Depreciation (Jan 1, 2010) 2010) + Depreciation Expense for 2 months = 3174 + 278 = 5458 Automobile, net (March 1, 2010) 2010) = Automobile at cost - Accumulated Depreciation Depreciati on (March (March 1, 2010) 2010) = 8354 - 5458
Company Transaction 4.
The patent listed li sted on the balance sheet shee t had been purchased by the Stern Corporation. Corporation. The cost of the patent was written off as an expense over ove r the remainde remainderr of its legal li fe as of years. December 31, 31, 2009 2009,, the patent's remaining legal l egal lif l ife e was five years Amorti zation 1 year
5.
Journal 4-5
11,250
On July 1, 2010, a typewriter that had cost $1,027 and had bee been n fully ful ly depreciated on December 31, 2009, was sold for $75. Offi ce Machi ne s, at cost
1,027
Acc. De pre ci ati on (De c 31, 2009) Offi ce Machi ne s, ne t
1,027 -
Sol d Loss/gai n on sal e s
75 75
Company Transaction 6.
On October pie ce of furniture was recorded on October 1, 2010 2010, the company sold a desk des k for $80 $80. This piece the books at a cost of $490 with an accumulated depreciation of $395 as of January 1, 2010. Furni ture & Fi xture s, at cost Acc. De pre ci ation ( Jan 1, 2010)
490 395
Furni tu ture & Fi xt xture s, s, ne ne t (Jan 1, 20 2010)
95
Acc. De pre ci ation ( Oct 1,2010) Furni ture & Fi xture , ne t (Oct 1, 2010)
432 58
Sol d Loss/gai n on sal e s
Journal 6
80 22
Depreciation Expense for 9 months (Jan-Sept) = 9/12 * (depreciation rate*cost) = 9/12 * (10%*490) = 37 Accumulated Depreciation (October 1, 2010 2010)) = Accumulated Depreciation (Jan 1, 2010 2010)) + Depreciation Expense for 9 months = 395 + 37 = 432 Furniture & Fixtures, net (October ( October 1, 2010 2010)) = Furniture & Fixtures at cost - Accumulated Depreciation (March 1, 2010) = 490 - 432
Company Transaction 7.
Deprec eprecia iati tion on wa was ca calcula lculate ted d at at the the follo follow wing rates: tes: Bui l di ngs 2% Factory machi ne ry 10% * Furni ture & fi x ture s 10% Automoti ve equi pment 20% Offi ce machi ne s 10% * Included in the factory machinery cost of $3,425,585 was a machine costing $85,000 that had been fully f ully depreciated depreciated on December December 31, 31, 2009, 2009, and that t hat was wa s stll in use.
Depreciation Expense Building
= Depreciation Rate * Building at cost = 2% * 2.405.259 = 48.105 Factory Machinery
= Depreciation Depreciation Rate * (Factory (Factory Machinery at cost - fully depreciated machine – Office machine sold at cost) = 10% * (3.425.585 – 85.000 – 31.233) = 330.935 Furniture & Fixtures
= Depreciation Rate * (Furniture & Fixtures at cost – Desk sold at cost) = 10% * (56.484 – 490) = 5.599 Automotive Equipment
= Depreciation Rate * (Automotive Equipment at cost – automobile sold at cost) = 20% * (58.298 – 8.354) = 9.989 Office Machines = Depreciation Rate * (Office Machines at cost – typewriter sold at cost)
= 10% * (42.534 – 1.027) = 4.151
Journal 7 6/13/2015
Answer No. 1: Journal Entries JOURNAL ENTRIES 1.
Cash Accumul ated De pre ci ati on
3,866 27,367
Factory Machi ne ry 2.
3.
Tools expense Tool s Depreciation Expense Acc. De pre ci ati on - Automobil e Cash Accumul ated De pre ci ati on Loss on sale Automoti ve Equi pment
31,233 7,850 7,850 278 278 2,336 5,458 560 8,35 354 4
Transaction 7
Journal Entries
Transaction 6
Transaction 4-5
4.
5.
6.
Amorti zati on Expe nse Pate nt Cash Accumulated De pre ciati on Offi ce Machi ne s Gai n on sal e s De pre ciati on Expe nse Acc. Furniture & Fi xture Cash Accumulate d De pre ciati on Gain on sal e Furni ture & Fi xture
11,250 11,250 75 1,027 1,027 75 37 37 80 432 22 490
Journal Entries 7.
De De preci ati on Expense Acc. De pre ci ati on - Bui l di ngs De preci ati on Expense Acc. De pre ci ati on - Factory Machi nery
48,105 48,105 330,935 330,935
De preci ati on Expense Acc. De pre ci ati on - Furni ture & Fi xture s
5,599
De preci ati on Expense Acc. De pre ci ati on - Automoti ve Equi pment
9,989
De preci ati on Expense Acc. De pre ci ati on - Off i ce machi ne s
4,151
5,599
9,989
4,151
Answer No. 2
The correct totals for Property Proper ty,, Plant, and Equipment and the amount of accumulated depreciation as of December 31, 2010 Gross
Land Building
Accumulated depreciation
Net
186,563
0
186,563
2,405,259
711,484
1,693,775
(data exhibit 1+jurnal no 7) Factory machinery
Furniture and fixtures
Automotive equipment
Office machines
Tools
3,394,352
1,945,926
(data (data exhib exhibit it 1-jurnal 1-jurnal no 1)
(data (data exhib exhibit it 1+jurna 1+jurnall no 7-jurnal 7-jurnal no 1)
55,994
45,604
(data (data exhib exhibit it 1-jurnal 1-jurnal no 6)
(data (data exhib exhibit it 1+jurna 1+jurnall no 7-jurnal 7-jurnal no 6)
49,944
41,965
(data (data exhib exhibit it 1-jurnal 1-jurnal no 3)
(data (data exhib exhibit it 1+jurna 1+jurnall no 7-jurnal 7-jurnal no 3)
41,507
31,129
(data (data exhib exhibit it 1-jurnal 1-jurnal no 5)
(data (data exhib exhibit it 1+jurna 1+jurnall no 7-jurnal 7-jurnal no 5)
53,444
1,448,426
10,390
7,979
10,378
53,444
(data exhibit 1-jurnal no 2) Patent
45,000
(data (data exhibit exhibit 1- jurnal no 4)
45,000
