QUESTION 1 (15 MARKS) Cost of Plant Assets Dell Computers purchases a machine for $12,500, terms 2/10, n/60, FOB shipping point. Dell paid within the discount period and took the $250 discount. Transportation costs of $360 were paid by Dell. The machine required mounting and power connections costing $895. Another $475 is paid to assemble the machine and $40 of materials are used to get it into operation. During installation, the machine was damaged and $180 worth of repairs were made. Calculated the total cost to be recorded. (Show all your working/calculations)

QUESTION 2 (15 MARKS) Recording Costs of Assets Reebok purchased land for $390,000 as part of its plans to build a new plant. The company pays $33,500 to tear down an old building on the lot and $47,000 to fill and level the lot. It also pays construction costs of $1,452,200 for the new building and $87,800 for lighting and paving a parking area. Prepare a single Journal entry to record these costs incurred by Reebok, all of which are paid in cash.

QUESTION 3 (15 MARKS) Lump Sum Purchase of Plant Assets With the end of Lockdown due to Covid19, Facebook buys $395,380 for real estate with land, land improvements, and a building. Their goal is to get everyone back to the office. The land is appraised at $157,040; land improvements are appraised at $58,890; and the building is appraised at $176,670. 1. Determine the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

QUESTION 4 (15 MARKS) Depreciation To help Pfizer with their vaccine research projects, they are considering the purchase of a new electron-scanning microscope with USB connectivity. This scanning microscope has a cost of $10,500, with an estimated residual value of $500 and a projected useful life of four years. The research scientist estimates the microscope will scan 475,000 samples of covid19 during its life. It actually scans the following numbers: year 1, 121,400; year 2, 122,400; year 3, 119,600; and year 4, 118,200. The total number of samples scanned by the end of year 4 exceeds the original estimatethis difference was not predicted. (The machine must not be depreciated below its estimated residual value.) 4.1 Determine the straight-line (SL) depreciation schedules for year 1 to 4. 4.2 Determine Double declining balance (DDB) depreciation schedules for year 1 to 4. 4.3 Calculate the units of production depreciation schedule for year 1 to 4. Provide all your working/calculations, and illustrate your results in a table.

QUESTION 5 (15 MARKS) Asset Exchange Apple Inc owns a manufacturing machine in Ipad Production Facility that costs $38,400 with accumulated depreciation of $20,400. They exchange the machine with Samsung (so they can build their Galaxy Tablet) for a newer model that has a market value of $48,000. 1. Provide the General Journal entries recording the exchange assuming Apple paid $32,000 cash and the exchange has commercial substance. 2. Provide the General Journal entries recording the exchange assuming Apple pays $24,000 cash and the exchange lacks commercial substance.

QUESTION 6 (15 MARKS) Recording a Note Payable through its Time to Maturity During a recession many businesses borrow money to help increase business activity by financing inventory and accounts receivable. For example, Sony builds up its inventory to meet the needs of retailers selling the Playstation 5. A large portion of Sonys sales are on credit. As a result, Sony often collects cash from its sales several months after the transaction date. Assume on November 1, 2018, Sony borrowed $6 million cash from Chase Bank and signed a promissory note that matures in six months. The interest rate was 8.0 percent payable at maturity. The accounting period ends December 31. Prepare the required journal entries to record the note on November 1, 2018, interest on the maturity date, April 30, 2019, assuming that interest has not been recorded since December 31, 2018.

QUESTION 7 (10 MARKS) During the fiscal year ended December 31, Swanson Corporation engaged in the following transactions involving notes payable: Aug 6 - Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12 percent note payable. Sept 16 Purchased office equipment from Seawald Equipment. The invoice amount was $18,000 and Seawald agreed to accept, as full payment, a 10 percent, 3-month note for the invoice amount. Sept 20 Paid Maple Grove Bank the note plus accrued interest. Nov 1 Borrowed $250,000 from Mike Swanson, a major corporate stockholder. The corporate issued Swanson a $250,000, 15 percent, 90-day note payable. Dec 1 Purchased merchandise inventory in the amount of $5,000 from Gathman Corporation. Gathman accepted a 90-day, 14 percent note as full settlement of the purchase. Swanson Corporation uses a perpetual inventory system. Dec 16 The $18,000 note payable to Seawald Equipment matured today. Swanson paid the accrued interest on this note and issued a new 30-day, 16 percent note payable in the amount of $18,000 to replace the note that matured. 7.1 Prepare journal entries to record these transactions. Use a 360-day year in making the interest calculations. 7.2 Prepare the adjusting entry needed at December 31, prior to closing accounts. Use one entry for all three notes. 7.3 Provide a possible explanation why the new 30-day note payable to Seawald Equipment pays 16 percent interest instead of the e10 percent rate charged on the September 16 note.