Homeworksolution-ch.10

# Homeworksolution-ch.10 - EXERCISE 10-1(15-20 minutes...

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EXERCISE 10-1 (15-20 minutes) Item Land Land Impro- vements Building Other Accounts (a) (\$275,000) Notes Payable (b) \$275,000 (c) \$8,000 (d) 7,000 (e) 6,000 (f) (1,000) (g) 22,000 (h) 250,000 (i) 9,000 (j) \$ 4,000 (k) 11,000 (l) (5,000) (m) 13,000 (n) 19,000 (o) 14,000 (p) 3,000 (q) 180 GST Receivable

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EXERCISE 10-9 (10-15 minutes) 1. Truck #1. ............................................ 15,900 Cash. ......................................... 15,900 2. Truck #2. ............................................ 16,545* Discount on Note Payable. ............... 1,455 Cash. ......................................... 2,000 Note Payable. ........................... 16,000 *PV of \$16,000 @ 10% for 1 year = \$16,000 X .90909 = \$14,545 \$14,545 + \$2,000 = \$16,545 3. Truck #3. ............................................ 17,100 Cost of Goods Sold. .......................... 13,500 Inventory. .................................. 13,500 Sales. ......................................... 17,100 The selling (retail) price of the computer system appears to be a better gauge of the fair value of the consideration given than is the list price of the truck as a gauge of the fair value of the consideration received (truck). Vehicles are very often sold at a price below the list price. 4. Truck #4 (1,000 shares X \$15). ......... 15,000 Common Shares. ..................... 15,000 The market value of the shares is used to value this transaction. It provides a more reliable indicator of the fair market value of the transaction than the list price of the truck.
EXERCISE 10-11 (15-20 minutes) (a) 1. Equipment (\$50,000 + \$3,210). ............ 53,210 GST Receivable. .................................. 3,000 Accounts Payable. ..................... 56,210 Accounts Payable. ............................... 56,210 Discount Lost. ...................................... 562 Equipment (\$56,210 X .01). ........ 562 Cash. ........................................... 56,210 2. Equipment (new). ................................. 48,500* Accumulated Amortization. ................ 38,000 Gain on Disposal of Equipment 6,000** Accounts Payable. ..................... 40,500 Equipment (old). ......................... 40,000 **Cost \$40,000 Accumulated Amortization 38,000 Book value 2,000 Fair market value 8,000 Gain \$6,000 *Cost (\$40,500 + \$8,000) \$48,500 Accounts Payable. ............................... 40,500 Cash. ........................................... 40,500

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EXERCISE 10-11 (continued) 3. Equipment (\$35,182 + \$10,000). .......... 45,182 Discount on Note Payable. ................. 4,818 Note Payable. .............................. 40,000 Cash. ........................................... 10,000 *PV of annuity of \$20,000 @ 9% for 2 years = \$20,000 X 1.75911 = \$35,182.20 First payment on the note: Interest Expense. ................................. 3,166* Discount on Note Payable. ........ 3,166 Note Payable. ....................................... 20,000 Cash. ........................................... 20,000 * \$35,182 X 9% = \$3,166
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## This note was uploaded on 10/18/2010 for the course BUS ACC415 taught by Professor Bibijohn during the Spring '09 term at Seneca.

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Homeworksolution-ch.10 - EXERCISE 10-1(15-20 minutes...

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