Plant acquisitions for selected companies are as follows: 1. Cullumber Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $741,000. At the time of purchase, Torres's assets had the following book and appraisal values: Land Buildings Equipment Book Value Appraisal Value $197,000 $142,000 247,000 346,000 352,000 352,000 Cullumber Industries decided to take the lower of the two values for each asset it acquired. The following entry was made: Land Buildings Equipment Cash 142,000 247,000 352,000 741,000 Cullumber Industries expects the building structure to last another 20 years; however, it expects that it will have to replace the roof in the next five years. Torres Co. indicated that, on initial construction of the building, the roof amounted to 19% of the cost of the building. Because of the unique design and materials needed to replace the roof, the contractors stated that the roof structure is currently worth 15% of the value of the building purchase. 2. Hari Enterprises purchased equipment by making a $1,500 cash down payment and signing a $26,700, one-year, 10% note payable. The purchase was recorded as follows: Equipment 30,870 Cash 1,500 Notes Payable 26,700 Interest Payable 2,670 Kim Company purchased equipment for $28,000, terms 4/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was: 3. 4. Equipment 28,000 Cash 26,880 Purchase 1,120 Discounts Kaiser Inc. recently received land at zero cost from the Village of Chester as an inducement to locate its business in the village. The land's appraised value was $30,200. The company made no entry to record the land because it had no cost basis. Zimmerman Company built a warehouse for $629,000. It could have contracted out and purchased the building for $750,000. The controller made the following entry: 5. 750,000 Buildings Cash Sales Revenue 629,000 121,000 Prepare the entry that should have been made at the date of each acquisition. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter for the amounts. Do not round intermediate calculations. Round final answers to decimal places, e.g. 5,275.) Credit No. Account Titles and Explanation 1. Land Debit 125264 Buildings 305221 Equipment 310514 Cash > 741000 Buildings - Roof > 2. Equipment 28200 Cash 30200 Donation Revenue > 30200 5. Buildings 629000 Cash 629000 Prepare the correcting entry that is required in each case to correct the accounts. In other words, do not simply reverse the incorrect entry and replace it with the entry in the part above. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Do not round intermediate calculations. Round final answers to decimal places, eg. 5,275.) Debit Credit No. Account Titles and Explanation 1. Land
