Ch 10 Solutions

Ch 10 Solutions - SOLUTIONS TO EXERCISES EXERCISE 10-1...

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Unformatted text preview: SOLUTIONS TO EXERCISES EXERCISE 10-1 (1520 minutes) 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 EXERCISE 10-2 (1015 minutes) The allocation of costs would be as follows: Land Building Land .................................................................... $450,000 Razing costs....................................................... 42,000 Salvage ............................................................... (6,300) Legal fees ........................................................... 1,850 Survey ................................................................. $ 2,200 Plans ................................................................... 65,000 Title insurance ................................................... 1,500 Liability insurance ............................................. 900 Construction ...................................................... 2,740,000 Interest ................................................................ 170,000 $489,050 $2,978,100 EXERCISE 10-3 (1015 minutes) 1. Truck #1 ............................................................... 13,900 Cash ............................................................ 13,900 2. Truck #2 ............................................................... 18,364* Discount on Notes Payable ................................ 1,636 Cash ............................................................ 2,000 Notes Payable ............................................. 18,000 *PV of $18,000 @ 10% for 1 year = $18,000 X .90909 = $16,364 $16,364 + $2,000 = $18,364 3. Truck #3 ............................................................... 15,200 Cost of Goods Sold ............................................. 12,000 Inventory ..................................................... 12,000 Sales ............................................................ 15,200 [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 Common Stock ........................................... 10,000 Paid-in Capital in Excess of Par (1,000 shares X $13 = $13,000; $13,000 less $10,000 par value) ............. 3,000 EXERCISE 10-4 (2025 minutes) Purchase Cash paid for equipment, including sales tax of $5,000 ..... $105,000 Freight and insurance while in transit .................................. 2,000 Cost of moving equipment into place at factory.................. 3,100 Wage cost for technicians to test equipment ...................... 6,000 Special plumbing fixtures required for new equipment ...... Special plumbing fixtures required for new equipment ....
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Ch 10 Solutions - SOLUTIONS TO EXERCISES EXERCISE 10-1...

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