Exercise 10-16 Description Initial Cost on Seller’s Books Depreciation to Date o
ID: 2480025 • Letter: E
Question
Exercise 10-16
Description
Initial Cost on
Seller’s Books
Depreciation to
Date on Seller’s Books
Book Value on
Seller’s Books
Appraised Value
Date
Payment
Account Titles and Explanation
Debit
Credit
Acquisition of Assets 1 and 2
Acquisition of Asset 3
Acquisition of Asset 4
Acquisition of Asset 5
(To record acquisition of Office Equipment)
Exercise 10-16
Description
Initial Cost on
Seller’s Books
Depreciation to
Date on Seller’s Books
Book Value on
Seller’s Books
Appraised Value
Date
Payment
Account Titles and Explanation
Debit
Credit
Acquisition of Assets 1 and 2
Acquisition of Asset 3
Acquisition of Asset 4
Acquisition of Asset 5
(To record acquisition of Office Equipment)
Exercise 10-16
Hayes 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 $530,000 cash. The following information was gathered.
Description
Initial Cost on
Seller’s Books
Depreciation to
Date on Seller’s Books
Book Value on
Seller’s Books
Appraised Value
Machinery $530,000 $265,000 $265,000 $477,000 Equipment 318,000 53,000 265,000 159,000Asset 3: This machine was acquired by making a $53,000 down payment and issuing a $159,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $79,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $190,270.
Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.)
Facts concerning the trade-in are as follows.
Cost of machinery traded $530,000 Accumulated depreciation to date of sale 212,000 Fair value of machinery traded 424,000 Cash received 53,000 Fair value of machinery acquired 371,000
Asset 5
Office equipment was acquired by issuing 100 shares of $42 par value common stock. The stock had a market price of $58 per share.
Construction of Building: A building was constructed on land purchased last year at a cost of $795,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.
Date
Payment
2/1 $636,000 6/1 1,908,000 9/1 2,544,000 11/1 530,000To finance construction of the building, a $3,180,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $1,060,000 of other outstanding debt during the year at a borrowing rate of 8%.
Record the acquisition of each of these assets. (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 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Acquisition of Assets 1 and 2
Acquisition of Asset 3
Acquisition of Asset 4
Acquisition of Asset 5
(To record acquisition of Office Equipment)
Exercise 10-16
Hayes 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 $530,000 cash. The following information was gathered.
Description
Initial Cost on
Seller’s Books
Depreciation to
Date on Seller’s Books
Book Value on
Seller’s Books
Appraised Value
Machinery $530,000 $265,000 $265,000 $477,000 Equipment 318,000 53,000 265,000 159,000Asset 3: This machine was acquired by making a $53,000 down payment and issuing a $159,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $79,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $190,270.
Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.)
Facts concerning the trade-in are as follows.
Cost of machinery traded $530,000 Accumulated depreciation to date of sale 212,000 Fair value of machinery traded 424,000 Cash received 53,000 Fair value of machinery acquired 371,000
Asset 5
Office equipment was acquired by issuing 100 shares of $42 par value common stock. The stock had a market price of $58 per share.
Construction of Building: A building was constructed on land purchased last year at a cost of $795,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.
Date
Payment
2/1 $636,000 6/1 1,908,000 9/1 2,544,000 11/1 530,000To finance construction of the building, a $3,180,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $1,060,000 of other outstanding debt during the year at a borrowing rate of 8%.
Record the acquisition of each of these assets. (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 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Acquisition of Assets 1 and 2
Acquisition of Asset 3
Acquisition of Asset 4
Acquisition of Asset 5
(To record acquisition of Office Equipment)
Explanation / Answer
1)
Machinery A/c...Dr $265000
Equipment A/c...Dr $265000
To Cash A/c $530000
(Being Assets Purchased)
2)
Machinery A/c......Dr $190270
Interest Cost A/c..Dr. $21730
To Cash A/c. $53000
To Notes Payable A/c. $159000
(Being Machinery Purchased)
3)
Accumulated Dep A/c..Dr. $212000
New Machinery A/c......Dr $265000
Cash A/c...Dr. $53000
To Old Machine A/c. $530000
(Being Assets Exchanged)
4)
Office Equipment A/c Dr $5800
To Common Shares A/c. $4800
To Paid in Excess of Par A/c. $1000
(Being Office Equipment Acquired)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.