Record your response in the general ledger
1. Gordon’s inventory includes some Routers that are old technology. The 500 routers in stock were purchased for $30 each. Those routers could be purchased now for $17 each. Gordon does not want to recommend the use of old routers to clients. The company has an opportunity to sell the routers to an overstock company for $10 each. Costs to package and ship the routers to the overstock company will be $75.
2. Research efforts during the year resulted in a patent for a new type of switch used in telecommunication systems. The total costs to develop the new switch were $37,000. The cost to file for the patent was $3,000. The switch will probably produce revenue for 6 years because it will probably be replaced with new technology at that time. All $40,000 of the costs associated with the new switch were recorded as Operating Expenses.
| Debit | Credit | |
| Cash | 34,240 | |
| Accounts Receivable | 67,600 | |
| Allowance for Doubtful Accounts | 300 | |
| Inventory | 28,500 | |
| Equity Securities (at Fair Value) | 17,274 | |
| FV Adjustment – Equity Securities | 1,300 | |
| Investment in Ramsey Corporation | 70,000 | |
| Equipment | 78,126 | |
| Accum Deprec-Equip | 19,200 | |
| Building | 246,700 | |
| Accum Deprec – Building | 47,000 | |
| Land | 50,000 | |
| Right of Use Asset | 89,302 | |
| Accounts Payable | 57,500 | |
| Lease Liability | 69,302 | |
| Bank Loan | 25,935 | |
| Common Stock ($6.50 par) | 65,000 | |
| Paid in Capital – Common Stock | 86,400 | |
| Retained Earnings | 138,080 | |
| Treasury Stock (100 shares) | 2,200 | |
| Sales | 441,385 | |
| Design and Installation Revenue | 259,000 | |
| Cost of Goods Sold | 192,400 | |
| Operating Expenses | 244,000 | |
| Depreciation Expense | 2,900 | |
| Interest Expense | 14,700 | |
| Income Tax Expense | 69,860 | |
| TOTAL | 1,209,102 | 1,209,102 |
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