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blondinia [14]
3 years ago
10

Salad Express exchanged land it had been holding for future plant expansion for a more suitable parcel of land along distributio

n routes. Salad Express reported the old land on the previously issued balance sheet at its original cost of $79,000. According to an independent appraisal, the old land currently is worth $150,000. Salad Express paid $23,500 in cash to complete the transaction.
Required
1. What is the fair value of the new parcel of land received by Salad Express?
2. Record the exchange.
Business
1 answer:
r-ruslan [8.4K]3 years ago
5 0

Answer:

1.  $173,500

2. $ 71,000

Explanation:

Requirement 1: Solution

We can calculate the fair value of new parcel of land just by adding the current market price with additional cash paid to complete the transaction

Fair Value = Current market price + cash paid additionally

Fair Value = $150,000+$23,500

Fair value = $173,500

Requirement 2: Solution

We need to calculate Gain/loss on exchange first in order to record them on books. This can be done by just subtracting the land's book value from the current market price of land

Gain/loss on exchange = Current market price - book value

Gain/loss on exchange = $150,000 - $79,000

Gain/loss on exchange = $71,000

Entries:               Debit                          Credit  

New land           $173,500

Old land                                                 $79000

Cash                                                       $23,500

Gain                                                        $71,000

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5 0
2 years ago
Cindy invests $3000 in a bond trust that pays 8% interest compounded semiannually. Her friend, Jimmy, invests $3000 in a certifi
Elanso [62]

Answer:

Cindy has more amount than Jimmy.

Explanation:

Amount invested by Cindy P = $3000

Annual rate of interest = 8%

As the amount is compounded semiannually

So rate of interest =\frac{8}{2}=4% %

Time = 20 year

So time period n = 20×2 = 40

So amount own by Cindy A=P(1+\frac{r}{100})^n

A=3000(1+\frac{4}{100})^{40}=14403.06 $

Amount deposit by jimmy P = $3000

Annual rate of interest = 7.75 %

As the amount is compounded monthly

So rate of interest r=\frac{7.75}{12}=0.322 %

Time period = 20×12 = 240

So amount own by Jimmy A=P(1+\frac{r}{100})^n

A=3000(1+\frac{0.322}{100})^{240}=6503.650 $

From the calculation we can see that Cindy has more amount than Jimmy.

4 0
2 years ago
Bramble Corporation was organized on January 1, 2020. It is authorized to issue 10,500 shares of 8%, $100 par value preferred st
blsea [12.9K]

Answer and Explanation:

The journal entries, posting and preparation of the paid-in capital section of stockholders’ equity is presented below:

a. The journal entries are shown below:

On Jan 10

Cash $302,000  

        To Common Stock  $151,000 (75,500 shares × $2)

        To Paid in Capital in Excess of Stated Value-Common Stock $151,000

(Being the issuance of the common stock is recorded)  

On Mar 1

Cash $593,250  (5,650 shares × $105 )

               To Preferred Stock  $565,000 (5,650 shares × $100 )

               To Paid in Capital in Excess of Par-Preferred Stock $28,250  

(Being the issuance of the Preferred stock is recorded)  

On Apr 1

Land $83,000  

               To Common Stock  $50,000 (25,000 shares × $2)

                To Paid in Capital in Excess of Stated Value-Common Stock $33,000  

(Being the issuance of the common stock is recorded)  

On May 1

Cash $359,125  (84,500 shares × $4.25)

         To Common Stock  $169,000 (84,500 shares × $2)

         To Paid in Capital in Excess of Stated Value-Common Stock $190,125  

(Being the issuance of the common stock is recorded)  

On Aug 1

Organization expenses $41,000  

           To Common Stock  $22,000 (11,000 shares × $2)

            To Paid in Capital in Excess of Stated Value-Common Stock  $19,000  

(Being the issuance of the common stock is recorded)  

On Sep 1

Cash $60,000  (10,000 shares × $6)

       To Common Stock    $20,000 (10,000 shares × $2)

       To Paid in Capital in Excess of Stated Value-Common Stock $40,000

(Being the issuance of the common stock is recorded)    

On Nov 1

Cash $277,500  (2,500 shares × $111)

           To Preferred Stock  $250,000 (2,500 shares × $100)

           To Paid in Capital in Excess of Par-Preferred Stock  $27,500

(Being the issuance of the common stock is recorded)  

b. The T accounts of the above accounts are presented below:

                                     Preferred Stock

                                                             Mar 1        $565,000

                                                             Nov 1       $250,000

                                                            Balance    $815,000

                                     Common Stock

                                                             Jan 10     $151,000

                                                             April 1      $50,000

                                                             May 1       $169,000

                                                             Aug 1       $22,000

                                                             Sep 1       $20,000

                                                            Balance    $412,000

                         Paid in capital in excess of par - Preferred stock

                                                             Mar 1        $28,250

                                                             Nov 1       $27,500

                                                            Balance    $55,750

                      Paid in capital in excess of stated value - Common stock

                                                            Jan 10     $151,000

                                                             April 1      $33,000

                                                             May 1       $190,125

                                                             Aug 1       $19,000

                                                             Sep 1       $40,000

                                                            Balance    $433,125

c. Now the preparation is presented below:

                                     Bramble Corporation

                                     Balance Sheet Partial

                                   As of December 31, 2020

Stockholders Equity

Capital Stock

Preferred Stock             $815,000

Common Stock             $412,000

Total Capital Stock                           $1,227,000   (A)

Additional Paid in capital

Paid in Capital in Excess of Par-Preferred Stock $55,750

Paid in Capital in Excess of Stated Value-Common Stock  $433,125

Total Additional Paid in Capital        $488,875   (B)

Total Stockholders Equity                 $1,715,875   (A + B)

6 0
3 years ago
Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2020, for $115,000. On December 12, 2020, Kevin purchas
salantis [7]

Answer:a)$195,500 b) $10,735 c)$6,900

Explanation

a)adjusted basis of Kevin’s Bluebird stock on December 31, 2020?

1,000 shares was bought for $115,000

Therefore it was bought at  $115 per share

Also

750 shares was bought at  $80,500 and therefore bought at 107.33 per share

So in total of 1750 shares, He  spent $195,500    ($115,000+ $80,500)

b.On December 12, 2020,he bought  shares at 107.33 per share  

500 shares would be  500 x $107.33=$53, 665    

Therefore,   Kevin’s recognized gain or loss from the’ sale of Bluebird stock on March 1, 2021 would be

$64,400- $53, 665 = $10,735

c.Assuming he cannot identify the shares sold, then we can say they are sold on a FIFO ( first in first out) basis. So we would consider the shares bought on October 3, 2020

so we have that

500 x $115=$57,500

$64,400 - $57,500 = $6,900

7 0
2 years ago
Alan's employer maintains a long-term disability income plan on which it pays all premiums. Last year, Alan received $40,000 in
Margarita [4]

Answer:

$40,000

Explanation:

If Alan had paid the disability insurance himself, then disability income would not be taxable. But since Alan's employer paid the disability insurance premiums, then any disability payments that Alan received must be included in his gross income and are taxable.

6 0
3 years ago
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