Reference no: EM13488953

Question 

Lola industries purchased the following assets and constructed a building as well. All of this was done during the current year.

Assets 1 and 2:

These assets were purchased as a lump sum for $110,000 cash. The following was gathered:

 

Description	Initial Cost on Seller's Books	Depreciation to Date on Seller's Books	Book Value on Seller's Books	Appraised Value
Machinery	$100,000	$40,000	$60,000	$81,000
Office Equipment	70,000	25,000	45,000	44,000

Asset 3

Office Equipment was acquired by issuing 300 shares of $6 par value common stock. The stock had a market value of $14 per share.

Construction of Building

A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows:

 

Date	Payment
2/1	$100,000
6/1	380,000
9/1	460,000
11/1	120,000

 

To finance construction of the building, a $600,000 10% construction loan was taken out on 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 7%.

Required: Record all of the applicable acquisition/construction entries for each of these assets.