Name Show all calculations and work to receive full credit Q

Name: Show all calculations and work to receive full credit Question 1:5 Points Mad Hatter Enterprises purchased new equipment for $356,000, terms f.o.b. shipping point. Other costs connected with the purchase were as follows: State sales tax Freight costs Insurance while in transit Insurance after equipment placed in service Installation costs Insurance for the first year of operations Testing 29,200 5.400 800 1.200 2,000 2,400 700 Required Determine the capitalized cost of the equipment. Question 2: 5 Points On August 15. 2018. Willis Ine. acquired all of the outstanding common stock of Bork Inc. paying S6,400,000 cash. The book values and fair values of Willis\' assets and liabilities are listed below: Accounts receivable Inventories Property, plant, and equipment Accounts payable Bonds payable Book Value Fair Value $1,080,000 $975,000 1,620,000 2.450,000 5,400,000 6,975,000 1,800,000 1,800,000 2,700,000 2,475,000 Required: Prepare the journal entry to record the acquisition by Willis Inc. (hint-don\'t forget to check for goodwill)

Solution

Question 1: Calculate the capitalised cost of the equipment Particulars Amount Purchase cost $3,56,000.00 Add: State sales tax $29,200.00 Freight Cost $5,400.00 Insurance while in transit $800.00 Insatallation cost $2,000.00 Testing $700.00 Capitalised cost of equipment $3,94,100.00 Question:2 Descirption Amount$ Amount$ Accounts receivable 975000 Inventories 2450000 Property Plant Equipment 6975000 Goodwill(Balancing fig.) 275000 To Accounts Payable 1800000 To Bonds Payable 2475000 To Cash 6400000