Solution 3

# Solution 3 - \$2,550,000 = 23 \$2,000,000 = \$460,000 Total...

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Homework Problem 3 Solution 1(a) (\$1,000,000 - \$250,000) / 20 = \$37,500 / 12 = 3125 per month 2006: Depreciation expense \$28,125 Accumulated depreciation \$28,125 2007: Depreciation expense \$37,500 Accumulated depreciation \$37,500 1(b) (\$80,000 - \$5,000) / 120,000 = \$.63 per mile 2007: Depreciation expense \$2,520 (4,000*.63) Accumulated depreciation \$2,520 2008: Depreciation expense \$20,160 (32,000*.63) Accumulated depreciation \$20,160 ____A/D _____ Book Value = Cost – A/D: \$2,520 \$57,320 = \$80,000 - \$22,680 ______\$20,160 \$22,680 2(a) Cash \$50,000 A/D \$20,000 Loss \$20,000 Equipment \$90,000 2(b) Cash \$300,000 A/D \$120,000 Building \$200,000 Gain \$220,000 2(c) Building \$500,000 / \$2,550,000 = 20% * \$2,000,000 = \$400,000 Land \$800,000 / \$2,550,000 = 31% * \$2,000,000 = \$620,000 Inventory \$300,000 / \$2,550,000 = 12% * \$2,000,000 = \$240,000 Computers \$350,000 / \$2,550,000 = 14% * \$2,000,000 = \$280,000 Furniture \$600,000

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Unformatted text preview: / \$2,550,000 = 23% * \$2,000,000 = \$460,000 Total FMV \$2,550,000 2(c) continued Building \$400,000 Land \$620,000 Inventory \$240,000 Computers \$280,000 Furniture \$460,000 Cash \$2,000,000 2(d) Building \$300,000 Land \$200,000 Inventory \$500,000 Goodwill \$1,000,000 Cash \$2,000,000 3 November 15 th : Wage Expense \$36,000 FICA payable \$2,340 Federal payable \$10,700 State payable \$4,400 Cash \$18,650 Payroll Tax Expense \$3420 FUTA payable \$720 SUTA payable \$360 FICA payable \$2,340 4 August 1 st 2003: Cash \$200,000 Note Payable \$200,000 Dec 31 st 2003: Interest Expense \$4,165 Int. Payable \$4,165 Dec 31 st 2004: Interest Expense \$10,000 Int. Payable \$10,000 Dec 31 st 2005: Interest Expense \$10,000 Int. Payable \$10,000 August 1 st 2006: Note Payable \$200,000 Interest Payable \$24,165 Interest Expense \$5,831 Cash \$229,996 (rounding, \$330,000 ok)...
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Solution 3 - \$2,550,000 = 23 \$2,000,000 = \$460,000 Total...

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