Niloy Neogi

1612631030

sec-1

Part -B
1. Prepare all necessary entries in general journal entries for Lathorp Corp

Date Entries Name Ref Dr Cr

Otc-1 Accounts receivable- Dr $9800
(10000*98%)
Sales revenue - Cr $9800
Oct-5 Cash- Dr $11040
(12000*92%)
Loss on the sale of accounts- Dr $960
Accounts Receivables- Cr $11760
(12000*98%)
Sales discount- Cr $240

Oct-9 Accounts Receivables- Dr $200

(10000*2%)
Sales discount- Cr $200
(10000*2%)

Oct-9 Cash- Dr $4650

Finance charge (interest expenses)-Dr $350
(5000*7%)
Notes payable- Cr $5000

Oct-11 Accounts Receivables- Dr $200

(10000*2%)
Sales discount- Cr $200
(10000*2%)
Nov-15 Cash- Dr $25000
Loss on sale of receivable -Dr $5800
Accounts Receivables- Cr $30000
Recourse liability- Cr $800

Dec-11 Allowance for doubtful accounts- Dr $8500

{10000-(10000*15%)
Accounts Receivables- Cr $8500
{10000-(10000*15%)

Dec-31 Notes receivable- Dr $399297

Discount on notes receivable-Cr $175000
Gain on disposal of land- Cr $99297
Land- Cr $125000
(300000-175000)

Notes:
Nov-15
Computation of net proceeds:
Cash received- 25000
(-) Recourse liability :(800)
Net proceeds: $24200

Computation of gain or loss:

Carrying value: 30000
(-) Net proceeds: (24200)
Loss on sale of receivables: $5800

Dec-31

Computation of discount:

Face value of notes: 399297

present value of 1 for
3 periodic at10%: * .75132
present value of notes: $300000
face value of notes: 399297
discount on notes receivables: ($99297)
2.Journalize the following transactions from the perspective
of Alligator Corporation.

Date Entries Name Ref Dr Cr

Cash- Dr $30000000
April-21 (1000000*30)
$1000000
Common stock- Cr
(1000000*1)
$29000000
Pay in capital Cr
(29*1000000)
July-1 Alligator corporation
Machine cost- Dr $90749.3
(110000-19250.7)
Accumulated depreciation Dr $140000
Cash Dr $11000
Machine cost Cr $240000
Gain on disposal machine Cr $1749.3

July-1 Labor corporation

Machine cost- Dr $121000
Accumulated depreciation Dr $75000
Loss on disposal machine Dr $15000

Machine cost Cr $200000

Cash Cr $11000

August-6 Treasury stock Dr $20000

(800*25)
$20000
Cash Cr
(800*25)
September-1 Cash Dr $17600
(800*22)
Pay in capital Dr $2400
(800*3)
$20000
Treasury stock Cr
(800*25)
 September-17 Dividend Dr $ 33000
(110000*$1×30%= $33000)
To common stockholder’s $33000
Cr
(Being, dividend declared)

September-17 Common stockholders Dr $33000

$33000
To bank Cr
(Being, dividend paid)

December-31 Common stock Dr $110000

$110000
To Common stock Cr

December-31 Dividend Dr $22000

(110000*$0.20= $22000)
$22000
To common stockholders Cr

Notes:
Alligator corporation
Book Value 240,000

- Accumulated depreciation: (140000)

100000
-Fair Value: 121000

Disposal gain on Exchange: $21000

Both the parties lack commercial substance

Percentage of Partial Gain Recognition:

Cash Received
Cash Received + Fair Value of the Other Assets Received
11000
11000+ 121000
=8.33%
Partial Gain= 21000*8.33%= 1749.3
Deferred Gain= 21000-1749.3= 19250.7
Labor corporation
Book Value 200,000

- Accumulated depreciation: (75000)

125000
-Fair Value: 110000

Disposal loss on Exchange: $15000

3.prepare the journal entry (if any) to record the impairment of the
asset at December 31, 2019. Besides, prepare the journal entry to
record depreciation expense for 2020.

Date Entries Name ref Dr Cr

Loss on impairment Dr $7000

Accumulated depreciation Cr $7000

Depreciation expenses Dr $11500

(23000/2) $11500
Accumulated depreciation Cr

Notes:
Cost: 55000
(-) Accumulated depreciation (25000)
Carrying value: 30000
(-) Fair value: (23000)
Loss on impairment $7000