1) Jazz Company buys patent for $189,000 on January 2, 2007. Its estimated useful life is 4 years.
(a) Prepare the journal entry to record amortization expense for the first year.
(b) Illustrate how this patent is reported on balance sheet at the end of first year.
2) In its 2004 annual report, McDonald's Corporation reports beginning total assets of $25.5 billion; ending total assets of $27.8 billion; net sales of $19.1 billion, and net income of $2.3 billion.
(a) Calculate McDonald's return on assets ratio.
(b) Calculate McDonald's asset turnover ratio.