Mund Manufacturing, Inc. started operations at the beginning of the current fiscal year. The following transactions took

Question:

Mund Manufacturing, Inc. started operations at the beginning of the current fiscal year. The following transactions took place during the year. Assume that the transactions are cash transactions unless indicated as a nonmonetary event.
1. Acquired land at a cost of $ 5,000,000. In addition, legal fees, closing costs, and delinquent property taxes amounted to $ 35,000.
2. Paid current- period property taxes on the land, $ 23,000.
3. Removed existing structure on the land at a cost of $ 68,000 and sold scrap materials for $ 6,800.
4. Paid $ 320,000 for landscaping, lighting, fencing, and driveways.
5. Constructed a factory building at a cost of $ 35,000,000.
6. Acquired factory equipment at a cost of $ 985,000. Paid $ 35,000 for delivery and installation. Installed additional electrical circuits to run two of the machines at a cost of $ 55,000.
7. Damaged the loading dock during the installation of one piece of equipment; repair cost amounted to $ 18,500.
8. Acquired three delivery trucks by signing a five- year note at the dealership with 0% financing. The total market value of the trucks amounted to $ 121,080. The note carried a of $ 195,000. The current market rate of interest on similar financing is 10%. Trucks are acquired on January 1.
9. Adjusted entry for interest expense ( amortizing discount) at the end of the year.
10. Adjusted depreciation at the end of the year: All assets are depreciated on a straight- line basis with no residual values using a half- year convention taking a half- year depreciation in the year of acquisition and a half- year in the last year of the asset’s life. The estimated useful lives are as follows: • Buildings, 30 years • Equipment, 10 years • Vehicles, 8 years • Land improvements, 5 years
Required
a. Prepare the journal entries to record each of the transactions.
b. Indicate the effects of these transactions on the current year- end income statement, (exclude effects on the cash balance), and cash flow statement under both the direct and indirect methods. Balance Sheet
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