Question

On July 6, Waterway Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:

Land		$374,000
Buildings		1,122,000
Equipment		748,000
Total		$2,244,000

Waterway Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market price of $249 per share on the date of the purchase of the property.

2. Waterway Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. (Prepare consolidated entry for all transactions below.)

Repairs to building		$105,950
Construction of bases for equipment to be installed later		142,030
Driveways and parking lots		117,560
Remodeling of office space in building, including new partitions and walls		174,200
Special assessment by city on land		17,870

3. On December 20, the company paid cash for equipment, $273,300, subject to a 2% cash discount, and freight on equipment of $10,620.

Prepare entries on the books of Waterway Company for these transactions. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.

Answer 1

Answer:

	Appraised value	Amount($)
	Land	3,74,000
	Building	11,22,000
	Equipment	7,48,000
		22,44,000
	Total amount paid
	Common stock (12500*100)	12,50,000
	Paid in capital in excess of par-common stock	18,62,500
	12500*(249-100)
	Total amt paid	31,12,500
	Value assigned
	Land 374000/2244000*3112500	5,18,750
	Building 1122000/2244000*3112500	15,56,250
	Equipment 748000/2244000*3112500	10,37,500
No	Accounts Title	Debit($)	Credit($)
1	Land	5,18,750
	Building	15,56,250
	Equipment	10,37,500
	Common stock		12,50,000
	Paid in capital in excess of par-common stock		18,62,500
2	Building (105950+174200)	2,80,150
	Equipment	1,42,030
	Land Improvements	1,17,560
	Land	17,870
	Cash		5,57,610
3	Equipment (10620+(273300*98%))	2,78,454
	Cash		2,78,454