Account Titles and Explanation Acquisition of Assets 1 and 2 Machinery Equipment Cash Acquisition of Asset 3 Machinery Debit 217,500 72,500 Credit 290,000 104,110 Discount on Notes Payable 11,890 Cash 29,000 87,000 Notes Payable Acquisition of Asset 4 Machinery Accumulated Depreciation-Building Cash Machinery Gain on Disposal of Machinery Acquisition of Asset 5 Equipment Common Stock Paid-in Capital in Excess of Par - Common Stock (To record acquisition of Equipment) Land Buildings cash Interest Expense 116,000 29,000 290,000 Sandhill Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $290,000 cash. The following information was gathered. Description Machinery Equipment Initial Cost on Seller's Books Depreciation to Date on Seller's Book Value on Books Seller's Books Appraised Value $290,000 174,000 $145,000 29,000 $145,000 145,000 $261,000 87,000 Asset 3: This machine was acquired by making a $29,000 down payment and issuing a $87,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $43,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $104,110. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $290,000 Accumulated depreciation to date of sale 116,000 Fair value of machinery traded 232,000 Cash received 29,000 Fair value of machinery acquired 203,000 Asset 5: Equipment was acquired by issuing 100 shares of $23 par value common stock. The stock had a market price of $32 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $435,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $348,000 6/1 1,044,000 9/1 1,392,000 11/1 290,000 To finance construction of the building, a $1,740,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $580,000 of other outstanding debt during the year at a borrowing rate of 8%. Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Account Titles and Explanation Acquisition of Assets 1 and 2 Machinery Equipment Cash Acquisition of Asset 3 Machinery Debit 217,500 72,500 Credit 290,000 104,110 Discount on Notes Payable 11,890 Cash 29,000 87,000 Notes Payable Acquisition of Asset 4 Machinery Accumulated Depreciation-Building Cash Machinery Gain on Disposal of Machinery Acquisition of Asset 5 Equipment Common Stock Paid-in Capital in Excess of Par - Common Stock (To record acquisition of Equipment) Land Buildings cash Interest Expense 116,000 29,000 290,000 Sandhill Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $290,000 cash. The following information was gathered. Description Machinery Equipment Initial Cost on Seller's Books Depreciation to Date on Seller's Book Value on Books Seller's Books Appraised Value $290,000 174,000 $145,000 29,000 $145,000 145,000 $261,000 87,000 Asset 3: This machine was acquired by making a $29,000 down payment and issuing a $87,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $43,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $104,110. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $290,000 Accumulated depreciation to date of sale 116,000 Fair value of machinery traded 232,000 Cash received 29,000 Fair value of machinery acquired 203,000 Asset 5: Equipment was acquired by issuing 100 shares of $23 par value common stock. The stock had a market price of $32 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $435,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $348,000 6/1 1,044,000 9/1 1,392,000 11/1 290,000 To finance construction of the building, a $1,740,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $580,000 of other outstanding debt during the year at a borrowing rate of 8%. Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 29P

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