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Lola industries purchased the following assets and constructed a building as well. All of this was done during the current year. Assets 1 and 2:

Lola industries purchased the following assets and constructed a building as well. All of this was done during the current year.

Assets 1 and 2:

These assets were purchased as a lump sum for $110,000 cash. The following was gathered:

Description

Initial Cost on Sellers Books

Depreciation to Date on Sellers Books

Book Value on Sellers Books

Appraised Value

Machinery

$100,000

$40,000

$60,000

$81,000

Office Equipment

70,000

25,000

45,000

44,000

Asset 3:

Office Equipment was acquired by issuing 300 shares of $6 par value common stock. The stock had a market value of $14 per share.

Construction of Building

A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows:

Date

Payment

2/1

$100,000

6/1

380,000

9/1

460,000

11/1

120,000

To finance construction of the building, a $600,000 10% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 7%.

Required:Record all of the applicable acquisition/construction entries for each of these assets.

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