Question Details

Prepare the journal entries to record the following transactions 



Ex. 1
Compute the asset turnover ratio based on the following: 
	Beginning total assets	$   800,000
	Ending total assets	1,200,000
	Net income	300,000
	Net sales	2,200,000 
Asset turnover ratio = $2,200,000  [($800,000 + $1,200,000)  2] = 2.2 times  
During 2011 Perez Corporation reported net sales of $4,000,000 and net income of $1,500,000. Its statement of financial position reported average total assets of $1,600,000.

Instructions
Calculate the asset turnover ratio.

aEx. 2
Prepare the journal entries to record the following transactions for Eklund Company which has a calendar year end and uses the straight-line method of depreciation.

a)	On September 30, 2011, the company exchanged old delivery equipment and $24,000 for new delivery equipment. The old delivery equipment was purchased on January 1, 2009, for $84,000 and was estimated to have a $12,000 residual value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through December 31, 2010. It is estimated that the fair value of the old delivery equipment is $36,000 on September 30, 2011.

(b)	On June 30, 2011, the company exchanged old office equipment and $40,000 for new office equipment. The old office equipment originally cost $80,000 and had accumulated depreciation to the date of disposal of $35,000. It is estimated that the fair value of the old office equipment on June 30 was $60,000. The transaction has commercial substance.





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