To finance the construction of the building, a $1,920,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $640,000 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, e.g., 1.25124 and final answer to 0 decimal places e.g., 58,971. Credit account titles are automatically indented when the 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****Acquisition of Assets 1 and 2**| Account Titles and Explanation | Debit | Credit ||--------------------------------|-------|--------|| | | || | | || | | |**Acquisition of Asset 3**| Account Titles and Explanation | Debit | Credit ||--------------------------------|-------|--------|| | | || | | || | | |**Acquisition of Asset 4**| Account Titles and Explanation | Debit | Credit ||--------------------------------|-------|--------|| | | || | | || | | | **Nash Industries Asset Acquisition and Building Construction Overview**Nash Industries purchased several assets and constructed a building, all within the current year. Detailed information on these transactions is given below:### Assets 1 and 2:These assets were acquired together for a total sum of $320,000 in cash. Details include:| Description | Initial Cost on Seller's Books | Depreciation to Date on Seller's Books | Book Value on Seller's Books | Appraised Value ||-------------|--------------------------------|---------------------------------------|-----------------------------|------------------|| Machinery | $320,000 | $160,000 | $160,000 | $288,000 || Equipment | $192,000 | $32,000 | $160,000 | $96,000 |### Asset 3:This was acquired by making a $32,000 down payment and issuing a $96,000, 2-year, zero-interest-bearing note. The note will be paid in two installments of $48,000 at the end of the first and second years. The estimated outright purchase price of the asset was $114,880.### Asset 4:Acquisition involved trading used machinery, which lacked commercial substance. Details of the trade-in are:- **Cost of machinery traded:** $320,000- **Accumulated depreciation to date of sale:** $128,000- **Fair value of machinery traded:** $256,000- **Cash received:** $32,000- **Fair value of machinery acquired:** $224,000### Asset 5:Equipment was acquired by issuing 100 shares of $26 par value common stock. The stock had a market price of $35 per share.### Construction of Building:A building was constructed on purchased land, at a cost of $480,000. Construction started on February 1 and concluded on November 1. Payments made to the contractor were:| Date | Payment ||-------|-----------|| 2/1 | $384,000 || 6/1 | $1,152,000|| 9/1 | $1,536,000|| 11/1 | $320,000 |A $1,920,000, 12% construction loan was taken out on February 1 and repaid on November 1. The firm also had $4,

Journal Entry: Journal entry is used to record the business transactions of an enterprise during the fiscal period.

Nash 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 $ 320,000 cash. The following information was gathered. Initial Cost on Depreciation to Book Value on Description Seller's Books Date on Seller's Books Seller's Books Appraised Value Machinery $320,000 $ 160,000 $ 160,000 $ 288,000 Equipment 192,000 32,000 160,000 96,000 Asset 3: This machine was acquired by making a $ 32,000 down payment and issuing a$ 96,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $ 48,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $ 114,880. 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 $320,000 Accumulated depreciation to date of sale 128,000 Fair value of machinery traded 256,000 Cash received 32,000 Fair value of machinery acquired 224,000 Asset 5: Equipment was acquired by issuing 100 shares of $ 26 par value common stock. The stock had a market price of $ 35 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $ 480,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $ 384,000 6/1 1,152,000 9/1 1,536,000 11/1 320,000 To finance

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q