Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Buffalo fndustries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2 These

image text in transcribed
image text in transcribed
Buffalo fndustries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2 These assets were purchased as a lump sum for $159,960cash. The following information was gathered: Asset 3 This machine was acquired by making a $21.500 down payment and issuing a $64,500,1-year, zero-interest-bearing note. The note is to be paid oft in at the end of the first year, It was estimated that the asset could have been purchased outright for $78,260. Asset 4 This machinery was acquired by trading in used machinery. .The exchange lacks commercial substance.) Facts concerning the trade-in are as follows: Asset 5 Machinery was acquired by issuing 1.000 shares of $1 par value common stock. The stock was actively traded and had a market value of $6 per share. Construction of Building A bulilding was constructed on land purchased last year at a cost of $103.200. Construction began on March 1 and was completed on September 1. The payments to the contractor were as follows: To finance construction of the buliding. a $516,000,10% construction loan was taken out on March 1 . The loan was repaid on September 1. The firm had $344,000 of other outstanding debt during the year at a borrowing rate of 12%. Record the acquisition of each of these assets. (List all debit entries before credit entries. Round intermediate caiculations to 5 decimal places, eg. 1.25124 and final answer to 0 decimal ploces eg. 58,971. Credit account tities are automatically indented when amount is entered. Do not indent monually, If no entry is required, select "No Entry" for the account tities and enter O for the amounts. Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Acquisition of Asset. 3 Acquisition of Asset 4 Acquisition of Asset 5 (To record machinery) Buffalo fndustries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2 These assets were purchased as a lump sum for $159,960cash. The following information was gathered: Asset 3 This machine was acquired by making a $21.500 down payment and issuing a $64,500,1-year, zero-interest-bearing note. The note is to be paid oft in at the end of the first year, It was estimated that the asset could have been purchased outright for $78,260. Asset 4 This machinery was acquired by trading in used machinery. .The exchange lacks commercial substance.) Facts concerning the trade-in are as follows: Asset 5 Machinery was acquired by issuing 1.000 shares of $1 par value common stock. The stock was actively traded and had a market value of $6 per share. Construction of Building A bulilding was constructed on land purchased last year at a cost of $103.200. Construction began on March 1 and was completed on September 1. The payments to the contractor were as follows: To finance construction of the buliding. a $516,000,10% construction loan was taken out on March 1 . The loan was repaid on September 1. The firm had $344,000 of other outstanding debt during the year at a borrowing rate of 12%. Record the acquisition of each of these assets. (List all debit entries before credit entries. Round intermediate caiculations to 5 decimal places, eg. 1.25124 and final answer to 0 decimal ploces eg. 58,971. Credit account tities are automatically indented when amount is entered. Do not indent monually, If no entry is required, select "No Entry" for the account tities and enter O for the amounts. Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Acquisition of Asset. 3 Acquisition of Asset 4 Acquisition of Asset 5 (To record machinery)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions