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Solve the following two problems in which you are asked to apply proper asset valuation. Submit your solutions to both problems on the same page of one Excel document.

Problem 1

You have been given the following information for Ethan Company as of June 1, 2010. Ethan Company purchased a parcel of land and then incurred specific costs for the construction of a new building. Below is a list of these costs:

Cost of Parking Lot and gates=$14,000

Cost of filling the building site= $10,000

Legal Fees to buy land= $2,000

Cost of driveway= $9,000

Property Taxes for Jan 1,2010 to June 1, 2010= $5,000

Title Insurance= $2,000

Interest on the construction loan= $13,000

Proceeds from the sale of salvage materials= ($1500)

Purchase price of land= $200,000

Cost of the building construction= $650,000

Cost of razing building on lot= $9,500

Cost of grading the lot= $5,000

 

  1. Using Excel, determine the accounts that are affected by the above transactions and the final balance of each account. (Note: The interest on the construction loan will be applied to the cost of the land.)
  1. Please prepare your solution in an Excel file.

Problem 2

On April 25, 2010, Bullseye Company purchased all of the outstanding common stock of Vista Company, paying $14,000,000. The book values and fair values of Vista's assets and liabilities acquired are shown below in dollar amounts:

Accounts

Book Value

Fair Value

Accounts Receivables

$1,900,000

$1,725,000

Inventories

$2,800,000

$4,000,000

Accounts Payable

$2,000,000

$2,000,000

Property, Plant and Equipment

$8,000,000

$12,625,000

Bonds Payable

$4,600,000

$4,225,000

 

  1. Using Excel, prepare the journal entry to record the acquisition by Bullseye Company.
  2. Submit your solution in same Excel file as for Problem 1.
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