On March 1, Pierce Corp. purchased machinery from Thompson Industries by paying $15,000 cash and signing a 2-year noninterest-bearing note for $80,000. Pierce recorded an $18,735 discount on notes payable for this transaction. What is the acquired cost of the machinery on March 1? A) $61,265 B) $76,265 C) $80,000 D) $95,000
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- Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: Paid shipping of $1,000 Paid installation fees of $2,000 Pays annual maintenance cost of $200 Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.Farm Fresh Agriculture Company purchased Sunny Side Egg Distribution for $400,000 cash when Sunny Side had net assets worth $390,000. A. What is the amount of goodwill in this transaction? B. What is Farm Fresh Agriculture Companys journal entry to record the purchase of Sunny Side Egg Distribution? C. What journal entry should Farm Fresh Agriculture Company write when the company tests for impairment and determines that goodwill is worth $1,000 in the year following the purchase of Sunny Side?Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?
- Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000Garcia Co. owns equipment that costs $150,000, with accumulated depreciation of $65,000. Garcia sells the equipment for cash. Record the journal entry for the sale of the equipment if Garcia were to sell the equipment for the following amounts: A. $90,000 cash B. $85,000 cash C. $80,000 cash
- Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. The equipment was purchased on account for $43,000 Credit terms were 310/, n30/. Payment was made within the discount period and the company records the purchases of equipment net of discounts. Connors gave the seller a noninterest-bearing note. The note required payment of $45,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation, Connors traded in old equipment that had a book value of $15,000 ( original cost of $32, 000 and accumulated depreciation of $17,000) and paid cash of 540,000. The old equipment had a fair value of $9, 700 on the date of the exchange. The exchange has commercial substance. Connors issued 2, 000 shares of its no-par common stock in exchange for the equipment. The market value of…Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $25,000. Credit terms were 2/10, n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $27,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 10% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $6,000 (original cost of $14,000 and accumulated depreciation of $8,000) and paid cash of $22,000. The old equipment had a fair value of $2,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,000 shares of its nopar common stock in exchange for the equipment. The market…Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $32,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,500 shares of its no-par common stock in exchange for the equipment. The market…
- Kervin Company acquired three items of machinery as follows: During 2021, the entity purchased a machine for P500, 000 down and four monthly installments of P1, 250, 000. The cash price of the machine was P4, 700, 000. On January 1, 2021, the entity purchased a machine for P2, 000, 000 in exchange for a noninterest bearing note requiring four payments of P500, 000. The first payment was made on January 1, 2021. The rate of interest for this note at date of issuance was 10%. The present value of an ordinary annuity of 1 at 10% is 3.17 for four periods. The present value of an annuity of 1 in advance at 10% is 3.49 for four periods. On January 1, 2021, the entity acquired a machine by issuing a four-year, noninterest bearing note for P2, 000, 000. The note is due on January 1, 2025. The entity has a 10% interest for this type of note. The present value of 1 at 10% for 4 years is 0. 68. What is the total cost of the three machines?UMPI Corporation purchased conveyor equipment with a list price of $15,000. Presented below are three independent cases related to the equipment. (Round to the nearest dollar.) Instructions: Prepare the general journal entries required to record the acquisition and payment in each of the independent cases below. 6.1 UMPI paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross. 6.2 UMPI traded in equipment with a book value of $2,000 (initial cost $8,000), and paid $8,500 in cash. The old equipment could have been sold for $1,400 at the date of trade. (The exchange did have commercial substance.) 6.3 UMPI signed an interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time.On January 1, 2021, Cheyenne Corp. purchased equipment for $22000. The company is depreciating the equipment at the rate of $880 per month. At January 31, 2022, the balance in Accumulated Depreciation is: $11440 credit. $880 debit. $54560 debit. $10560 credit.
