Question

1.Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,425,000. Harding paid $350,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $370,000; Building, $1,100,000 and Equipment, $730,000. (Round percentages to two decimal places: ie .054 = 5%).

What journal entry would be used to record the purchase of the above assets?

Group of answer choices

a。

Land	242,250​
Building	712,500​
Equipment	470,250​
Cash		350,000​
Notes payable		1,075,000​

b。

Land	370,000​
Building	1,100,000​
Equipment	730,000​
Cash		2,200,000​

c。

Land	370,000​
Building	1,100,000​
Equipment	730,000​
Cash		1,075,000​
Notes payable		350,000​
Gain on purchase of long-term assets		775,000​

d。

Land	370,000​
Building	1,100,000​
Equipment	730,000​
Cash		350,000​
Notes payable		1,850,000​

2.

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,330,000. Harding paid $315,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $333,000; Building, $990,000 and Equipment, $657,000. (Round percentages to two decimal places: ie .054 = 5%).

Assume that Harding uses the units-of-production method when depreciating its equipment. Harding estimates that the purchased equipment will produce 1,040,000 units over its 5-year useful life and has a salvage value of $17,000. Harding produced 269,000 units with the equipment by the end of the first year of purchase. Which amount below is closest to the amount Harding will record for depreciation expense for the equipment in the first year?

Group of answer choices

$165,538.462

$109,126

$88,460

$169,936

Answer 1

1)
Accounts title and Explanation	Debit (in $ )	Credit (in $ )
Land	$ 242,250
Building	$ 712,500
Equipment	$ 470,250
Cash		$ 350,000
Notes Payable - Bal. Fig.		$ 1,075,000
(lumpsum purchases recorded)
Option (a) is Correct
Allocation of Total Cost	Appriased Value	% of Apportionement	Acqusition Cost	Apportioned Cost
Land	$ 370,000	17%	$ 1,425,000	$ 242,250
Building	$ 1,100,000	50%	$ 1,425,000	$ 712,500
Equipment	$ 730,000	33%	$ 1,425,000	$ 470,250
Total	$ 2,200,000	100%		$ 1,425,000

2)
Appraised value of equipment		$ 657,000
Total appraised value =	$ 333,000 + $ 990,000 + $ 657,000 =	$ 1,980,000
% Apportioned	$ 657,000 / $ 1,980,000 =	33%
Apportioned Cost of Equipment =	$ 1,330,000 x 33%	$ 438,900
Depreciation Expense for First Year	(Cost (-) Salvage Value )           x Units Produced / Total Units	( $ 438,900 (-) $ 17,000) x 269,000 / 1,040,000	$ 109,126
			option (b) is Correct