Question
Salmon Manufacturing Ltd. had the following transactions in 2019: a) b) On February 1, acquired land and a building for use as a head office
Salmon Manufacturing Ltd. had the following transactions in 2019: a) b) On February 1, acquired land and a building for use as a head office by issuing a non-interest bearing, two-year note for $2 million. An independent appraisal indicated the following values: Land $650,000, Building $1,350,000. An interest rate of 5% would properly reflect the substance and credit risk of the transaction. On April 30, completed and paid for the following projects that relate to the land and building: Constructed a new paved parking lot and driveway at a cost of $126,000 Installed a sign on top of the building at a cost of $38,000 Landscaped the grounds at a cost of $27,500 IV. Painted the building exterior at a cost of $9,600 On May 15, acquired furniture in exchange for 27,000 common shares The average market value of the shares this year has been around $21 per share in a volatile market. An independent valuator determined the fair value of the furniture to be $435,000 On June 30, purchased the net assets of its competitor Bluefin Ltd. for $1,950,000 with the following book values and fair values Book value Fair value Accounts receivable $550,000 $550,000 Inventory 275,000 330,000 Equipment 1,025,000 1,125,000 Patents 0 160,000 Accounts payable 150,000 150,000 Notes payable 200,000 200,000 e) On September 3, paid $19,000 in legal fees in a successful patent defence related to the patent acquired on June 30. Required: Prepare journal entries to record the above transactions for Salmon Manufacturing Ltd
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