Chp 10 12th ed Exercises and Problems Solutions

Chp 10 12th ed Exercises and Problems Solutions - EXERCISE...

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EXERCISE 10-1 (15–20 minutes) Item Land Land Improvements 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 EXERCISE 10-3 (10–15 minutes) 1. Truck #1. ............................................................... 13,900.00 Cash. ........................................................... 13,900.00 2. Truck #2. ............................................................... 14,727.26* Discount on Notes Payable. ............................... 1,272.74 Cash. ........................................................... 2,000.00 Notes Payable. ........................................... 14,000.00 *PV of $14,000 @ 10% for 1 year = $14,000 X .90909 = $12,727.26 $12,727.26 + $2,000.00 = $14,727.26 3. Truck #3. ............................................................... 15,200.00
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Cost of Goods Sold. ............................................ 12,000.00 Inventory. .................................................... 12,000.00 Sales. ........................................................... 15,200.00 [Note to instructor: 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. ............................................................... 13,000.00 Common Stock. .......................................... 10,000.00 Paid-in Capital in Excess of Par. .............. 3,000.00 (1,000 shares X $13 = $13,000)
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EXERCISE 10-5 (30–40 minutes) Land Buildings Other Abstract fees $ 520 Architect’s fees $ 3,170 Cash paid for land and old building 87,000 Removal of old building ($20,000 – $5,500) 14,500 Interest on loans during construction 7,400 Excavation before construction 19,000 Machinery purchased $53,900 $1,100 —Misc. expense Freight on machinery 1,340 (Discount Lost) Storage charges caused by noncompletion of building 2,180 —Misc. expense (Loss) New building 485,000 Assessment by city 1,600 Hauling charges—machinery 620 —Misc. expense Installation—machinery 2,000 (Loss) Landscaping 5,400 $109,020 $514,570 $57,240 $3,900 EXERCISE 10-7 (20–25 minutes) (a) Avoidable Interest Weighted-Average Accumulated Expenditures X Interest Rate = Avoidable Interest $2,000,000 12% $240,000 1,600,000 10.42% 166,720 $3,600,000 $406,720
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Weighted-average interest rate computation Principal Interest 10% short-term loan $1,400,000 $140,000 11% long-term loan 1,000,000 110,000 $2,400,000 $250,000 Total Interest = $250,000 = 10.42% Total Principal $2,400,000
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EXERCISE 10-7 (Continued) (b) Actual Interest Construction loan $2,000,000 X 12% = $240,000 Short-term loan $1,400,000 X 10% = 140,000 Long-term loan $1,000,000 X 11% = 110,000 Total
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Chp 10 12th ed Exercises and Problems Solutions - EXERCISE...

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