Preparing the Journal Entries for the Acquisition of Assets

Assets 1 and 2

These assets were purchased as a lump sum of $104,000 cash. The following information was gathered.

Desc: Intial cost of depre. to date Book Value on Appraised Value
sellers books on seller's book Seller's books
Machinery $100,000 $50,000 $50,000 $90,000
Off. Equip. 60,000 10,000 50,000 30,000

Asset 3

This machine was acquired by making a $10,000 down payment and issuing a $30,000, 2-year zero-interest-bearing note. The note is to be paid off in two $15,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $35,000

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 $100,000
Accum. depre. to date of sale 36,000
Fair value of machinery traded 80,000
Cash received 10,000
Fair value of machinery acquired 70,000

Asset 5

Office equipment was acquired by issuing 100 shares of $8 par value common stock. The stock had a market value of$11 per share.

Construction of Building

A building was constructed on land purchased last year at a cost of $180,000. Construction began on Feb. 1 and was completed on Nov. 1. The payments to the contractor were as follows

DATE Payment
2/1 $120,000
6/1 360,000
9/ 480,000
11/1 100,000

To finance construction of the building, a $600,000, 12% construction loan was taken out of February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%

Record the acquisition of each of these assets.