Question
1. ABC purchased real estate for $480,000, plus closing costs and fees of $60,000. The property which included land, building, and land improvements was appraised
1.
ABC purchased real estate for $480,000, plus closing costs and fees of $60,000. The property which included land, building, and land improvements was appraised for $600,000, as follows:
Building | $300,000 | Land | $180,000 | Land Improvements | $120,000 |
Compute the amount that will be debited to Building $_________________ Land $ ________________ Land Improvements $_________________
2.
ABC purchased a new machine on a deferred payment basis using a zero-interest-bearing note. ABC made a down payment of $5,000 and will make ten monthly installment payments of $14,000 each. The present value of the ten payments is $130,000. ABC paid $6,000 to install the machine and $1,200 to repair damage during installation. Prepare the journal entry to record the purchase. Compute the amount that will be debited to the machinery account. $________________
3.
On January 1, ABC borrowed $300,000 at 9% to help finance the construction of a new building. Other than the construction note, ABC had two notes outstanding ($500,000 at 12% and $1,000,000 at 9%). The following expenditures were made during the year:
Date | Expenditures |
January 1 | $ 360,000 |
November 1 | 900,000 |
Compute the amount of interest that will be capitalized. $________________
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