# Course Project

Pages: 7 (271 words) Published: September 7, 2014
﻿Acct 550c Week6 Homework

E10-1

Item

Land

Land Improvements

Bldg

Other Accts
(a)

(\$275,000) Notes Payable
(b)

\$275,000

(c)

\$ 10,000

(d)

7,000

(e)

6,000

(f)

(1,000)

(g)

25,000

(h)

250,000

(i)

9,000

(j)

\$ 4,000

(k)

11,000

(l)

(5,000)

(m)

13,000

(n)

19,000

(o)

14,000

(p)

3,000

E10-3

1.
Trucks
13,900

Cash

13,900

2.
Trucks
18,364*

Discount on Notes Payable
1,636

Cash

2,000

Notes Payable

18,000

*PV of \$18,000 @ 10% for 1 year =

\$18,000 X .90909 = \$16,364

\$16,364 + \$2,000 = \$18,364

3.
Trucks
15,200

Cost of Goods Sold
12,000

Inventory

12,000

Sales Revenue

15,200

4.
Trucks
13,000

Common Stock

10,000

Paid-in Capital in Excess of Par –
Common Stock
(1,000 shares X \$13 = \$13,000;
\$13,000 less \$10,000 par value)

3,000

E10-7

(a)
Avoidable Interest

Weighted-Average

Accumulated Expenditures
X
Interest Rate
=
Avoidable Interest

\$2,000,000

12%

\$240,000

1,800,000

10.38%

186,840

\$3,800,000

\$426,840

Weighted-average interest rate computation
Principal

Interest

10% short-term loan
\$1,600,000

\$160,000

11% long-term loan
1,000,000

110,000

\$2,600,000

\$270,000

Total Interest
=
\$270,000
= 10.38%
Total Principal

\$2,600,000

(b)
Actual Interest

Construction loan
\$2,000,000 X 12% =
\$240,000

Short-term loan
\$1,600,000 X 10% =
160,000

Long-term loan
\$1,000,000 X 11% =
110,000

Total
\$510,000

Because avoidable interest is lower than actual interest, use avoidable interest.

Cost
\$5,200,000

Interest capitalized
426,840

Total cost
\$5,626,840

Depreciation Expense
=
\$5,626,840 – \$300,000
= \$177,561

30 years

P10-8
1.
Holyfield Corporation

Cash
23,000

Machinery
69,000

Accumulated Depreciation—Machinery
60,000

Loss on Disposal of Machinery
8,000*

Machinery

160,000

*Computation of loss: Book value
\$100,000

Fair value
(92,000)

Loss
\$ 8,000

Dorsett Company

Machinery
92,000

Accumulated Depreciation—Machinery
45,000

Loss on Disposal of Machinery
6,000*

Cash

23,000

Machinery

120,000

*Computation of loss: Book value
\$ 75,000

Fair value
(69,000)

Loss
\$ 6,000

2.
Holyfield Corporation

Machinery
92,000

Accumulated Depreciation—Machinery
60,000

Loss on Disposal of Machinery
8,000

Machinery

160,000

Winston Company

Machinery (\$92,000 – \$11,000)
81,000*

Accumulated Depreciation—Machinery
71,000

Machinery

152,000

*Computation of gain
deferred: Fair value

\$92,000

Book value
(81,000)

Gain deferred
\$11,000

3.
Holyfield Corporation

Machinery
95,000

Accumulated Depreciation—Machinery
60,000

Loss on Disposal of Machinery
8,000

Machinery

160,000

Cash

3,000

Liston Company

Machinery
92,000