Premium Essay

Mccloud Whinery

In:

Submitted By jmcclure938
Words 801
Pages 4
Accounting at MacCloud Winery Write Up

The leased building should be accounted for as an asset. Specifically a capital lease. A capital lease is a long-term lease that transfers the lessee most rights and obligations concerning the asset leased. To calculate out the lease payments on the building (10 years x $5,000 per year = $50,000) $50,000 exceeds the value of the building being at only $32,000. While a capital lease usually transfers ownerships at the end of the lease that won't be the case for Mike. This is because the lease contract mike signed did not mention any bargain purchase option or that Mike might assume ownership of the lease building. The agreement to pay the lease rentals is a liability and is recorded as an expense. This is because Mike is making $5,000 payments each year for the next 10 years to lease the building.

Journal entry on day of loan: Debit Cash $180,000 and Credit Notes Payable $180,000. For the next 3 years journal entries: Debit Notes Payable $10,000, debit Interest Expense $1,000 (10,000 x .10 = 1,000) and finally credit cash $11,000. Journal entry on the lump sum after 3 years: Debit Notes Payable $150,000 ( 3 years x $10,000 =30,000) (180,000 - 30,000 = 150,000), debit interest expense $15,000 ($150,000 x .10 = $15,000), and credit cash 165,000 (180,000 - 15,000 = $165,000).

Mike should treat the land as an asset. Mike would debit land 250,000 and credit notes payable 180,000 and credit cash 70,000. The vines that Mike acquired should be treated as an asset exchange. Mike bought the grapevines at $10,000 per acre and he is planning on developing 4 acres. (10,000 x 4 = 40,000) The journal entry would be: debit to grapevines $40,000 and a credit to cash $40,000. Since the grapevines have a useful life of 75 years the grapevines are depreciating in value. (40,000 - 0/75 =$533) Each year the grapevines

Similar Documents

Free Essay

The Effectiveness of Mccloud’s Appeal

...book such as the comic book format, dialogue, and tone prove to effectively convey the definition and understanding of comics to a younger audience such as teenagers and college students rather than older adults, the parents and grandparents of the younger audience. If only certain groups of people are likely to accept McCloud’s method, then his intentions of establishing a better reputation for comics have failed. At first it may seem that creating a book enlightening the reader about comics in the comic book format is an exceedingly clever method. If the reader could easily comprehend what McCloud was trying to say about comics, the act itself of reading Understanding Comics could be a lesson. McCloud argues that comics can effectively communicate information but also admits to once having perceived them as “crude, poorly-drawn, semiliterate, cheap, disposable kiddie fare,” (McCloud 3). Yet, this seemingly clever attempt also has a backfiring effect. Because Understanding Comics is written in comic book...

Words: 1942 - Pages: 8

Premium Essay

University Writing

...UW Essay #1 Rough Draft – “Blog Critique” of a Wordless Graphic Novel One important concept that Scott McCloud discusses in his book, Understanding Comics, is the fascinating idea of closure. This idea essentially refers to filling in the gaps of a certain part of the story based on some, but not all of the information. Closure then becomes more or less complex, depending on what the author says. This is an important concept that is utilized in Passionate Journey by Frans Masereel because a great deal of the book relies heavily on the interpretation of the reader. With this in mind, the reader is able to gain an understanding of the book using the information that is given and filling in the gaps based on what he or she knows. In the book Passionate Journey, Frans Masereel uses the concept of closure in order to express the relationship that the main character develops with the young girl that he ends up falling in love with. The first image depicts the main character with a young girl. In the book, it appears that he somewhat raises this girl and takes care of her. They clearly have some type of bond because he is joyfully carrying her on his shoulders as they take a walk through the park. I feel that initially the reader is confused because he or she is wondering where this girl came into play in the first place and why the main character is taking care of her. It seems a bit random. Although it seems this way, it does appear to be harmless. Nothing seems odd about a man...

Words: 1262 - Pages: 6