Prepare the Required Adjusting Journal Entry at December 31, 2016

question 124

Essay

Prepare the required adjusting journal entry at December 31, 2016, the end of the annual accounting period for the three items below. Assume that no adjusting entries have been made during the year. If no entry is required, explain why.
A.Polk Company acquired a patent that cost $6,000 on January 1, 2016.The patent was registered on January 1, 2012.The useful life of a patent is 20 years from registration.
B.Polk Company acquired a gravel pit on January 1, 2016, that cost $24,000.The company estimates that 30,000 tons of gravel can be extracted economically.When all the gravel has been extracted, no residual value is anticipated.During 2016, 4,000 tons were extracted and sold.
C.On January 1, 2016, Polk Company acquired a used dump truck that cost $6,000 to use hauling gravel.The company estimated a residual value of 10% of cost and a useful life 4 years.The company uses straight-line depreciation.

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Definitions:

Before-Tax Total Income

The total income earned by an individual or a business before any taxes are deducted.

Poorest 20 Percent

The segment of a population that ranks at the bottom fifth in terms of income.

Income Mobility

The ability of individuals or families to move up or down the economic ladder within a society over time.

Economic Status

An individual's or area's financial condition and stability, often measured by income, employment, and wealth indicators.