Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vaughn Industries 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
image text in transcribed
image text in transcribed
image text in transcribed
Vaughn Industries 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 $260,000 cash. The following information was gathered. Book Value on Seller's Books Appraised Value Description Machinery Equipment Initial Cost on Seller's Books $260,000 156,000 Depreciation to Date on Seller's Books $130,000 26,000 $130,000 130,000 $234.000 78,000 Asset 3: This machine was acquired by making a $26.000 down payment and issuing a $78,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $39.000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $93,340. Asset 4: This machinery was acquired by trading in used machinery (The exchange lacks commercial substance) Facts concerning the trade in are as follows $260.000 Cost of machinery traded Accumulated depreciation to date of sale 104,000 208,000 Fair value of machinery traded Cash received Fair value of machinery acquired 26,000 182,000 Asset 5: Equipment was acquired by issuing 100 shares of $21 par value common stock. The stock had a market price of $29 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $390,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment $312,000 2/1 6/1 936,000 9/1 1,248,000 11/1 260.000 To finance construction of the building, a $1,560,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $520,000 of other outstanding debt during the year at a borrowing rate of 8% Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, &$ 1.25124 and final Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Machinery Equipment Acquisition of Asset 3 Machinery Cash TIDE DONT Notes Payable Acquisition of Asset 4 Machinery Cash Machinery Gain on Disposal of Machinery DIE LUI DONNA Acquisition of Asset 5 Equipment Common Stock Paid in Capital in Excess of Par Common Stock (To record acquisition of Office Equipment) Buildings Equipment Common Stock Paldin Capitalin excess of Par - Common Stock (To record acquisition of Office Equipment) Buildings DURATIE Cash

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Cost Accounting Foundations And Evolutions

Authors: Michael R. Kinney, Cecily A. Raiborn

7th Edition

0324560559, 978-0324560558

More Books

Students also viewed these Accounting questions