Dark Wizard Company obtained land by issuing 2,000 shares of its $10 par value common stock. The land was recently appraised at $85,000. The common stock is actively traded at $41. per share. Prepare the journal entry to record the acquisition of the land.
(Entries for equipment acquisition) Jane Geddes Engineering Corporation purchased conveyor equipment (rounded to nearest dollar)
a) Geddes paid cash for the equipment 8 days after the purchase. The vendor credit terms are 2/10,, n/30. Assume that equipment purchases area recorded gross.
b) Geddes traded in equipment wit a book value of $2000. (initial cost 8000), and paid $9,500 in cash one month after the purchase. The old equipment could have been sold for $400 at the date of trade. (the exchange has commercial substance).
c) Geddes gave the vendor a $10,800 zero interest bearing note for the equipment on the date of purchase. The note was due n one year and was paid on time. Assume that the effective interest rate in the market was 9%.
1-Prepare the general journal required to record the acquisition and payment in each of the independent cases above. (round to the nearest dollar.)
(Acquisition improvements and sale of realty)
William Bradford Company purchased land for use as its corporate headquarters. A small factory that was on thee land when it was purchased was torn down before construction of the office building began. Furthermore, a substantial amount of rock blassing and removal had to be done to the site before construction of the building foundation began. Because the office building was set back on the land far from the public road, Bradford Company had the contractor construct a paved road road that led from the public road to the parking lot of the office building. There years after the office building was occupied, Bradford Company added four stories to the office building. The four stories had an estimated useful life of 5 years more than the remaining estimated useful life of the original office building.
Ten years later the land and building were sold at an amount more than their net book value, and Bradford Company had a new office building constructed in another state for use as its new corporate headquarters.
a) Which of the expenditures above should be capitalized? How should each be depreciated or amortized? Discuss rationale for your answers.
b) How would the sale of the land and building be accounted for? Include in your answer an explanation of how to determine the net book value at the date of sale. Discuss the rationale for your answers.
Please see the attached file.
The entry would look like:
Land (2,000 X $41) 82,000
Common Stock (2,000 X $10) 20,000
Paid-in Capital in Excess of Par 62,000
(a) Journal entries:
Accounts Payable 10,000
Accounts Payable 10,000
Equipment ($10,000 X .02) 200
(b) Journal entries:
Equipment (new) 9,900*
Loss on Disposal of Equipment 1,600**
Accumulated Depreciation 6,000
Accounts Payable 9,500
Equipment (old) 8,000
Accumulated depreciation 6,000
Book value 2,000
Fair market value 400
*Cost ($9,500 + $400) $9,900
470+ words attached in Word show how to prepare journal entries for acquisition of land and purchase of equipment along with deciding which expenditures to capitalize and how to account for sales of land and buildings.