3101 Homework Solutions ch.10

3101 Homework Solutions ch.10 - Acct 3101 Intermed. Acctg 1...

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Acct 3101 Intermed. Acctg 1 Homework Solutions Text: Kieso et al. 13 th ed. Chapter 10 EXERCISE 10-1 Item Land Land Improvements Building Other Accounts (a) ($275,000) Notes Payable (b) $275,000 (c) $ 10,000 (d) 7,000 (e) 6,000 (f) (1,000) (g) 25,000 (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 File: 3101 homework solutions ch.10 Page 1
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EXERCISE 10-8 (a) Computation of Weighted-Average Accumulated Expenditures Expenditure Date Expenditure Amount X Capitalization Period = Weighted-Average Accumulated Expenditures March 1 $ 360,000 10/12 $ 300,000 June 1 600,000 7/12 350,000 July 1 1,500,000 6/12 750,000 December 1 1,200,000 1/12 100,000 $3,660,000 $1,500,000 Computation of Avoidable Interest Weighted-Average Accumulated Expenditures X Interest Rate = Avoidable Interest $1,500,000 12% (Construction loan) $180,000 Computation of Actual Interest $3,000,000 X 12% $360,000 $4,000,000 X 11% 440,000 $1,600,000 X 10% 160,000 $960,000 Note : Use avoidable interest for capitalization purposes because it is lower than actual interest. (b) Building. ....................................................................... 180,000 Interest Expense*. ....................................................... 780,000 Cash ($360,000 + $440,000 + $160,000). ......... 960,000 *Actual interest for year $ 960,000 Less: Amount capitalized (180,000 ) File: 3101 homework solutions ch.10 Page 2
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Interest expense debit $ 780,000 File: 3101 homework solutions ch.10 Page 3
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EXERCISE 10-18 (a) Exchange has commercial substance : Depreciation Expense. ................................................ 800 Accumulated Depreciation—Melter. .............. 800 ($12,700 – $700 = $12,000; $12,000 ÷ 5 = $2,400; $2,400 X 4/12 = $800) Melter. .......................................................................... 15,200** Accumulated Depreciation—Melter. ........................ 8,000 Gain on Disposal of Plant Assets. .................... 500* Melter. ................................................................ 12,700 Cash. .................................................................. 10,000
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This note was uploaded on 04/29/2011 for the course ACCT 3001 taught by Professor Erickson during the Spring '10 term at University of Minnesota Duluth.

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3101 Homework Solutions ch.10 - Acct 3101 Intermed. Acctg 1...

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