7. Journal entry preparation. 

On January 1 of the current year, Peter Houston invested $80,000 

cash into his company MuniServ. The cash was obtained from an owner investment by Peter 

Houston of $50,000 and a $30,000 bank loan. Shortly thereafter, the company acquired selected 

assets of a bankrupt competitor. The acquisition included land ($10,000), a building ($40,000), 

and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit 

the remaining balance due of $15,000 (an account payable) by February 15.

During January, the company had additional cash outlays for the following items:

Purchases of store equipment

$4,600

Note payment

500

Salaries expense

2,300

Advertising expense

700

The January utility bill of $200 was received on January 31 and will be paid next month. 

MuniServ rendered services to clients on account amounting to $9,400. 

All customers have been 

billed; by month end, $3,700 had been received in settlement of account balances.

Instructions

a.

Present journal entries that reflect MuniServ's January transactions, including the 

$80,000 raised from the owner investment and loan. 

b.

Compute the total debits, total credits, and ending balance that would be found in 

the company's Cash account. 

c.

Determine the amount that would be shown on the January 31 trial balance for Accounts 

Payable. Is the balance a debit or a credit?

 

 

2. The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Marigold, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4, 323,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Marigold borrowed $4, 323,000 payable In 10 annual installments of $432, 300, plus interest at the rate of 10%. During 2017, Marigold made deposit and progress payments totaling $1, 621, 125 under the contract; the weighted-average amount of accumulated expenditures was $864, 600 for the year. The excess borrowed funds were invested in short-term securities, from which Marigold realized investment income of $252, 200. What amount should Marigold report as capitalized interest at December 31, 2017? Capitalized interest $ _________ Situation II During 2017, Swifty Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities. All of these assets required an extended period of time for completion. Assuming the effect of interest capitalization is material, what is the total amount of interest costs to be capitalized? The total amount of interest costs to be capitalized $ _________ Situation III Nash, Inc. has a fiscal year ending April 30. On May 1, 2017, Nash borrowed $9, 188,000 at 11% to finance construction of its own building. Repayments of the loan are to commence the month following completion of the building. During the year ended April 30, 2018, expenditures for the partially completed structure totaled $6, 431, 600. These expenditures were incurred evenly throughout the year. Interest earned on the unexpended portion of the loan amounted to $597, 220 for the year. How much should be shown as capitalized interest on Nash's financial statements at April 30, 2018? Capitalized interest on Nash's financial statements $ ___

SuperTutor

(15)

Status NEW Posted 12 Jul 2017 12:07 AM My Price 12.00

-----------

Attachments

file 1499818762-Solutions file.docx preview (51 words )

S-----------olu-----------tio-----------ns -----------fil-----------e -----------Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k y-----------ou -----------for----------- yo-----------ur -----------int-----------ere-----------st -----------and----------- bu-----------yin-----------g m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l b-----------e q-----------uic-----------kly----------- on-----------lin-----------e a-----------nd -----------giv-----------e y-----------ou -----------exa-----------ct -----------fil-----------e a-----------nd -----------the----------- sa-----------me -----------fil-----------e i-----------s a-----------lso----------- se-----------nt -----------to -----------you-----------r e-----------mai-----------l t-----------hat----------- is----------- re-----------gis-----------ter-----------ed -----------onÂ----------- th-----------is -----------web-----------sit-----------e -----------Tha-----------nk -----------you----------- -----------

Not Rated(0)

• Buy Answer