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acct 3311 problems ch 10

acct 3311 problems ch 10 - ACCT 3311 FALL 2007 PAGE 10-1...

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Sheet1 Page 1 ACCT 3311 FALL 2007 PAGE 10-1 Example 1. There are three independent parts. Part A: On October 1, 2002, Ace Company purchased equipment with a ten year life from Deuce Company by paying $10,000 down and signing an 8% note requiring equal annual payments on October 1 of the years 2003, 2004, and 2005. The cash price of the equipment would have been $50,000. The equipment cost Deuce $30,000. Both companies have a December 31 year end. REQUIRED: Prepare all journal entries related to the above transactions for 2002 and 2003 for both Ace and Deuce. Part B: On July 1, 2002, Single Company purchased equipment with a ten year life from Double Company by paying $10,000 down and signing a note agreeing to make $20,000 payments on July 1 of the years 2003 through 2008. The equipment cost Double $45,000. A 12% interest rate would have been appropriate for this transaction. Both companies have a December 31 year end. REQUIRED: Prepare all journal entries related to the above transactions for 2002 and 2003 for both companies. Part C: On July 1, 2000, Trey Company purchased equipment with a ten year life from Quattro Company by paying $10,000 down and signing a 2 %, 4 year $50,000 note with interest payments due each July 1 (first due 7-1-2001). A 10% interest rate would have been appropriate for this transactions. The equipment cost Quattro $20,000. Both companies have a December 31 year end. REQUIRED: Prepare all journal entries related to the above transactions for 2000 and 2001 for both companies. Example 2. On January 1, 2002, Manchester Company purchased the assets of Arsenal Company for $3,450,000. On book value market value Land $ 400,000 $ 1,000,000 Building 800,000 2,000,000 Equipment 1,200,000 1,600,000 $ 2,400,000 $ 4,600,000 The building had an estimated remaining life of 20 years while the equipment had an estimated remaining life of 8 years. Required: b. Compute depreciation expense for 2002. Example 3 On January 1, 2001, Northerland Company purchased land for $100,000. The company paid $5,000 down and signed an 8% note agreeing to make equal annual payments on January 1 of the years 2002 to 2012. Required: Prepare all entries related to the acquisition and subsequent payments for 2001, 2002, and 2003. The company has a December 31 year end. Example 4 On January 1, 2001, Easterland Company purchased land by paying $5,000 down and signing a noninterest bearing note agreeing to make equal annual payments of $8,000 on January 1 of the years 2002 through 2015. A ten percent interest rate would have been appropriate for this transaction. that date, Arsenalhs assets had the following values: a. Prepare the journal entry on Manchesterhs books to record the acquisition.
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Sheet1 Page 2 Required: Prepare all entries related to the acquisition and subsequent payments for 2001, 2002, and 2003. The company has a December 31 year end. c ACCT 3311 FALL 2007 PAGE 10-2 $300,000, buildings for $500,000, and machinery and equipment for $750,000. The following transactions occurred during 2002: Costs for $75,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $25,000.
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