A On March 1, 2021, your company could have purchased additional assets but chose not to do so. Two asset purchases which were under consideration on March 1 and the expected impact of their purchase were as follows: You could have purchased the NET ASSETS of Freedom Company, one of your competitors who has a store in another part of the city, for $350,000 in cash. You would have issued $200,000 of 10 year, 4% bonds on March 1 when the market interest rate was 7%. These bonds pay interest SEMI-annually on August 31 and February 28. You use the interest method of amortization. You would have used all of the money from the bonds plus some of your own cash to pay for Freedom Company, Freedom Company had the following balance sheet on March 1, 2021 Book Value Market Value Cash $10,000 $10,000 Merchandise Inventory 60,000 65,000 Equipment 250,000 240,000 Accumulated Depreciation -50.000 Total Assets $270,000 $315,000 Accounts Payable $30,000 $30,000 Common Stock, S5 par 20,000 Paid in Capital In Excess of Par 100,000 Retained Earnings 120.000 Total Liabilities and Stock. Equity $270,000 Had you purchased the net assets of Freedom, you believe you would have also experienced the following: 1. Cash Sales would have increased by $500,000 2. Cost of goods sold would have increased by $200,000 Cash purchases of merchandise would have increased by $80,000 Wages Expense (paid in cash) would have increased by $70,000 5. Utilities Expense (paid in cash) would have increased by $30,000 Rent Expense (paid in cash) would have increased by $20,000 Advertising Expense (paid in cash) would have increased by $18,000 8. Interest Expense would have increased because of the bonds payable. 9. Depreciation of Freedom's equipment would have been calculated using the 150% declining balance method with a 5-year remaining life and a $20,000 salvage value 3. 4. 6. 7. OS INSTRUCTIONS: 1. Prepare the entries which would have been made to record the events of Alternative A, including any adjusting entries on December 31. Most of these transactions (such as sales and cost of goods sold) would have been made evenly throughout the last 10 months of the year 2021. A On March 1, 2021, your company could have purchased additional assets but chose not to do so. Two asset purchases which were under consideration on March 1 and the expected impact of their purchase were as follows: You could have purchased the NET ASSETS of Freedom Company, one of your competitors who has a store in another part of the city, for $350,000 in cash. You would have issued $200,000 of 10 year, 4% bonds on March 1 when the market interest rate was 7%. These bonds pay interest SEMI-annually on August 31 and February 28. You use the interest method of amortization. You would have used all of the money from the bonds plus some of your own cash to pay for Freedom Company, Freedom Company had the following balance sheet on March 1, 2021 Book Value Market Value Cash $10,000 $10,000 Merchandise Inventory 60,000 65,000 Equipment 250,000 240,000 Accumulated Depreciation -50.000 Total Assets $270,000 $315,000 Accounts Payable $30,000 $30,000 Common Stock, S5 par 20,000 Paid in Capital In Excess of Par 100,000 Retained Earnings 120.000 Total Liabilities and Stock. Equity $270,000 Had you purchased the net assets of Freedom, you believe you would have also experienced the following: 1. Cash Sales would have increased by $500,000 2. Cost of goods sold would have increased by $200,000 Cash purchases of merchandise would have increased by $80,000 Wages Expense (paid in cash) would have increased by $70,000 5. Utilities Expense (paid in cash) would have increased by $30,000 Rent Expense (paid in cash) would have increased by $20,000 Advertising Expense (paid in cash) would have increased by $18,000 8. Interest Expense would have increased because of the bonds payable. 9. Depreciation of Freedom's equipment would have been calculated using the 150% declining balance method with a 5-year remaining life and a $20,000 salvage value 3. 4. 6. 7. OS INSTRUCTIONS: 1. Prepare the entries which would have been made to record the events of Alternative A, including any adjusting entries on December 31. Most of these transactions (such as sales and cost of goods sold) would have been made evenly throughout the last 10 months of the year 2021