1. On July 6, Marigold Company acquired the plant assets of Doonesbury Company,
ID: 2519962 • Letter: 1
Question
1. On July 6, Marigold Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is: Land Buildings Equipment $362,000 1,086,000 724,000 $2,172,000 Total Marigold Company gave 12,500 shares of its?100 par value common stock in exchange. The stock had a market price of $235 per share on the date of the purchase of the property. 2. Marigold Company expended the following amounts in cash between July 6 and Decenber 15, the date when it first occupied the building. (Prepare consolidated entry for all transactions below.) Repairs to building Construction of bases for equipment to be installed later Driveways and parking lots Remodeling of office space in building, including new partitions and walls 169,070 Special assessment by city on land $103,140 126,440 113,060 16,570 3. On December 20, the company paid cash for equipment, $254,600, subject to a 2% cash discount, and freight on equipment of $11,350. Prepare entries on the books of Marigold Company for these transactions. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to o0 declmal 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 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2. 3.Explanation / Answer
SOLUTION
*1.
The cost of the property, plant and equipment is $2,937,500 (12,500 * $235)
The cost is allocated based on appraisal values as follows-
S.No. Account titles and Explanations Debit ($) Credit ($) 1. Building 1,468,750 Equipment 979,167 Land 489,583 Share Capital - Ordinary ($12,500*$100) 1,250,000 Share Premium - Ordinary ($2,937,500 - $1,250,000) 1,687,500 2. Building ($103,140 + $169,070) 272,210 Equipment 126,440 Land Improvements 113,060 Land 16,570 Cash 528,280 3. Equipment 260,858 Cash [($254,600*98%) + $11,350] 260,858Related Questions
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