AFM 101 Classroom Solutions - Nov 7th

AFM 101 Classroom Solutions - Nov 7th - E98 Req. 1 Date...

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Req. 1 Date Assets Liabilities Shareholders’ Equity March 1 No effect No effect No effect March 2 Cash Machinery –8,000 +10,000 Short term note payable +2,000 No effect March 3 Cash Machinery –250 +250 No effect No effect March 5 Cash Machinery –475 +475 No effect No effect Oct 1 Cash –2,140 Short term note payable –2,000 Interest expense –140 Interest expense = $2,000 x 12% x 7/12 = $140 Req. 2 Acquisition cost of the machine: Cash paid $ 8,000 Note payable with supplier 2,000 Freight costs 250 Installation costs 475 Acquisition cost $10,725 Req. 3 Acquisition cost ($10,000 + $250 + $475). ........................................................... $10,725 Less: Residual value. ............................................................................................ 1,725 Amount to be amortized. ........................................................................................ 9,000 Depreciation for 2012: ($9,000 ÷ 10 years) x 10/12 (months) =. ......................... $ 750 Req. 4 On October 1, 2013, $140 of interest expense is paid and is recorded as interest expense. The amount is generally not capitalized (added to the cost of the asset) because interest is normally capitalized only on constructed assets. This machine was purchased. Req. 5 (end of 2013)
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This note was uploaded on 12/19/2011 for the course AFM 101 taught by Professor Kennedy during the Fall '08 term at Waterloo.

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AFM 101 Classroom Solutions - Nov 7th - E98 Req. 1 Date...

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