Question: Moulton Corporation engaged in the following seven transactions during December

Moulton Corporation engaged in the following seven transactions during December, Year 12, in preparation for opening the business on January 1, Year 13. We continue with data for Moulton Corporation in Chapter 3, Problem 3.22. You will not need some of the information given here until you work that problem. We give this information here, as the firm would often learn this information at the time of the transaction described here.
(1) Issued for cash 80,000 shares of $10 par value at par.
(2) Acquired for cash land costing $50,000 and a building costing $450,000. Information for later use: The building has an expected useful life of 25 years beginning on January 1, Year 13.
(3) Purchased merchandise inventory costing $280,000 on account from various suppliers.
(4) Paid for inventory purchased in (3) with an original invoice price of $250,000 in time to take advantage of a 2% discount for prompt payment. The firm treats discounts taken as a reduction in the cost of inventories. The firm has not yet paid for the remaining $30,000 of purchases on account.
(5) Paid $12,000 for a one-year insurance policy on the land and building. The insurance coverage begins January 1.
(6) Borrowed $300,000 from a bank on December 31, Year 12. Information for later use:
The loan bears interest at an annual rate of 8% and is due in five years. The interest is payable on January 1 of each year, beginning January 1, Year 14, and the $300,000 amount borrowed is due on December 31, Year 17.
(7) Acquired equipment on December 31 costing $80,000 and signed a 6% note payable to the supplier. The note is due on June 30, Year 13. Information for later use: The equipment has an estimated useful life of 5 years.
a. Record these seven transactions in T-accounts.
b. Prepare a balance sheet for Moulton Corporation as of December 31.

View Solution:

Sale on SolutionInn
  • CreatedMarch 04, 2014
  • Files Included
Post your question