231.

A machine costing $450,000 with a 4-year life and an estimated salvage value of $30,000 is installed
by Peters Company on January 1. The company estimates the machine will produce 1,050,000 units of
product during its life. It actually produces the following units for the first 2 years: Year 1, 260,000; Year 2,
275,000. Enter the depreciation amounts for years 1 and 2 in the table below for each depreciation
method. Show calculation of amounts below the table.

232.On July 1 of the current year, Glover Mining Co. pays $5,400,000 for land estimated to contain
7,200,000 tons of recoverable ore. It installs machinery on July 3 costing $864,000 that has an 8 year life
and no salvage value and is capable of mining the ore deposit in six years. The company removes and
sells 745,000 tons of ore during its first six months of operations ending on December 31. Depreciation of
the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore
is mined. Prepare the entries Glover must record for (a) the purchase of the ore deposit, (b) the costs and
installation of the machinery, (c) the depletion assuming the land has a zero salvage value, and (d) the
depreciation on the machinery.  

233.On July 1 of the current year, Timberlake Company signed a contract to sublease space in a building
for 7 years. Timberlake Company paid $56,000 for the right to sublease this space. After taking
possession of the leased space, Timberlake pays $140,000 for improving the office portion of the lease
space. The improvements are paid on July 6 of the current year, and are estimated to have a useful life
equal to the 14 years remaining in the life of the building. Prepare entries for Timberlake to record (a) its
payment for the right to sublease the building space, (b) its payment for the office improvements, (c) the
December 31 year-end entry to amortize the cost of the sublease, (d) the December 31 year-end entry to
amortize the office improvements.  

234.Westport Company reports the following in millions: net sales of $25,300 for 2016 and $22,640 for
2015; end-of-year total assets of $14,875 for 2016 and $13,680 for 2015. Compute its total asset turnover
for 2016 and assess its level if competitors average a total asset turnover of 2.0 times.  
 5400000 864000
7200000 8

450000 0.75 54000

30000 745000
420000 1050000 558750
Answer 231
Depreciation per unit = (Cost less salvage value)/Total Units
Depreciation per unit = ($ 450,000 less $ 30,000)/1,050,000 units = $ 0.40 per unit
Year $ 1 $ 2
Number of units produced 260,000 275,000
multiplied by depreciation per unit $ 0.40 $ 0.40
$ 104,000 $ 110,000
Answer 232-a
Ore deposit-Asset $ 5,400,000
Cash $ 5,400,000
Answer 232-b
Machinery $ 864,000
Cash $ 864,000

Answer 232-c
Depletion expense $ 558,750
Accumulated Depletion $ 558,750
($ 5,400,000/7,200,000 tons * 745,000 tons)

Answer 232-d
Depreciation expense $ 54,000
Accumulated Depreciation $ 54,000
($ 864,000/8 years * 6 months/12 months)

Answer 233-a
Leasehold $ 56,000
Cash $ 56,000

Answer 233-b
Leasehold improvements $ 140,000
Cash $ 140,000

Answer 233-c
Rent expense $ 2,000
Accumulated amortization-Leasehold $ 2,000
($ 56,000/14 years * 6 months/12 months)

Answer 233-d
Amortization expense-leasehold improvements $ 5,000
Accumulated amortization-Leasehold $ 5,000
($ 140,000/14 years * 6 months/12 months)

Answer 234
year $ 2,016 $ 2,015
net Sales $ 25,300 $ 22,640
Total Assets $ 14,875 $ 13,580
Total Asset turnover = Net Sales/Average Total Assets
Total Asset turnover = $ 25,300/$ 14,227.5 = 1.77
Westport company has less total asset turnover of 1.77 than that of the competitors.

Average total assets = (Beginning total assets add Ending total assets)/2
Average total assets = ($ 13,580 add $ 14,875)/2 = $ 14,227.50
competitors.