ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 89

2)
Mehta Company traded a used welding machine (cost
$9,000, accumulated depreciation $3,000) for office
equipment with an estimated fair value of $5,000. Mehta also
paid $3,000 cash in the transaction. Prepare the journal entry
to record the exchange.

3)
Ottawa Corporation owns machinery that cost $20,000
when purchased on July 1, 2011. Depreciation has been
recorded at a rate of $2,400 per year, resulting in a balance is
accumulated depreciation of $8,400 at December 31, 2014.
The machinery is sold on September 1, 2015, for $10,500.
Prepare journal entries to (a) update depreciation for 2015 and
(b) record the sale.

4)
Martin Buber co. purchased land as a factory site for
$400,000. The process of tearing down two old buildings on
the site and constructing the factory required 6 months. The
company paid $42,000 to raze the old buildings and salvaged
lumber and brick for $6,300. Legal fees of $1,850 were paid
for title investigation and drawing the purchase contract.
Martin Buber paid $2,200 to an engineering firm for a land
survey, and $68,000 for drawing the factory plans. The land
survey had to be made before definitive plans could be drawn.
Title insurance on the property cost $1,500, and a liability
insurance premium paid during construction was $900. The
contractor’s charge for construction was $2,740,000. The
company paid the contractor in two installments:$1,200,000 at
the end of 3 months and $1,540,000 upon completion. Interest