Answer:
- Melba's adjusted basis for the land at the Acquisition date is $625000
- Melba's adjusted basis for the land one year later is $645000
Explanation:
The adjusted basis for a property/land is the net cost of the property after adjusting for factors that might attract tax as related to the land
The adjusted basis for the land at the acquisition date is the net cost of the land at the acquisition date which will be ( $225000 + $400000 ) because that was the net cost of the Land at the date of acquisition before an agreement was later reached by Melba requiring him to pay $400000 plus an interest of 5%
Hence the adjusted basis for the land one year later will be
= ( $225000 + $400000 ) + 5% of $400000
= ( $625000 ) + $20000
= $645000
Answer:
August 2 Notes Receivable 8000 Dr
Accounts Receivable- Ryan 8000 Cr
October 30 Interest receivable 220 Dr
Interest Revenue 220 Cr
October 31 Cash 8220 Dr
Notes Receivable 8000 Cr
Interest Receivable 220 Cr
Explanation:
When we receive the Note against the Accounts Receivable, we will credit the Accounts Receivable to close the account of Ryan and create a new current asset account of Notes Receivable on August 2.
On October 30, 90 days period of Note is complete so we will record the interest that is receivable for us on this note.
- Interest Receivable = 8000 * 11% * 90/360 = $220
We record this as Interest Receivable as we have not received this and credit Interest revenue as it is our income.
On 31 October, when we receive cash it will be total of Notes payable and Interest so we will debit cash by 8220 and credit the Notes payable and interest receivable.
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Answer:
The use of raw material in the production process
Explanation:
The journal entry for recording the raw material used for the production process is shown below:
Work in Process Inventory A/c Dr XXXXX
To Raw Materials Inventory A/c XXXXX
(Being the raw material used for the production process is recorded)
For recording this transaction, we debited the Work in Process inventory account and credited the Raw Materials Inventory account
