Problem 23-2 (ACP) Credulous Company purchased equipment on January 1, 2020 under the following terme: a. P200,000 downpayment b. Five annual payments of P100,000, the first installment note to be paid on December 31, 2020. The same equipment was available at a cash price of P580,000. Required: Prepare journal entries for 2020 and 2021. Problem 23-3 (ACP) On January 1, 2020, Enrich Company purchased a machine under the following terms: a. P100,000 downpayment b. Four annual payments of P200,000, the first installment note to be paid on December 31, 2020. The fair value of the machine is not clearly determinable on the date of acquisition, The prevailing rate of interest for this type of obligation is 10%. ‘The present value factors at 10% for four periods are: Present value of 1 683 Present value of ordinary annuity of 1 3.170 Required: Prepare journal entries for 2020 and 2021. 651Problem 23-4 (IAA) Anson Company had the following machinery 4° during the year: quisitions ine wi anvoice price of 3,000,009 1. Acquired a machine with an invoice Pri ,00¢ subject to a cash discount of 10% which was not taken. of P50,000 in removing the old lation of the new one. Machin. +t of P150,000. The entity incurred cost machine prior to the instal supplies were acquired at a cos' current year, the entity (000 down and four monthly e cash price of the machine bo During the early part of purchased a machine for P500,' installments of P1,250,000. Th was P4,700,000. ‘At the beginning of current year, the entity purchased a machine for P2,000,000 in exchange for a noninterest bearing note requiring four payments of P500,000. The first payment was made at the end of current year. ~ ‘The implicit rate of interest for this note at date of issuance was 10%. The present value of an ordinary annuity of 1 at 10% is 3.17 for four periods. The present value of an annuity of 1 in advance at 10% is 3.49 for four periods. 4 At the beginning of current year, the entity acquired a machine by issuing a four-year, noninterest-| i for P2,000,000. i ta ‘The entity has an implicit 10% int interest for the type of note. The present value of 1 at 10% for 4 years is 0.68. Required: Prepare journal entri ntries t; ‘ and related interest, "4 the machinery acquisitionsProblem 23-5 (IAA) 1. Nutty Company made the following individual cash purchases: ‘di 0 Land and building 6,000,001 Machinery and office equipment 1,800,000 Delivery equipment 500,000 An appraisal disclosed the following fair value: Land 1,000,000 Buildi 3,000,000 Nadie 800,000 Office equipment. 400,000 Delivery equipment 350,000 2. Nutty Company acquired the assets of another entity with the following fair value: Land 1,000,000 Building 5,000,000 Machinery 2,000,000 The entity issued 60,000 shares with P100 par value in exchange. The share had a quoted price of P150 on the date of purchase of the property. 3. Received a parcel of land located in Davao City from a philanthropist as an inducement to locate a plant in the city. The land has a fair value of P1,500;000. 4, The entity paid cash for machinery, P900,000 subject to 2% cash discount, and freight on machinery, P35,000. 5. The entity acquired furniture and fixtures by issuing a 400,000 two-year noninterest-bearing note. In similar transactions, the entity has paid 12% interest. The present value of 1 at 12% for 2 years is .797, and the present value of an annuity of 1 at 12% for 2 years is 1.69. Required: Prepare journal entries to record the transactions. 653d} Problem 23-6 (AICPA Adapted) ei. Cherish Company provided the following : : tory for a computer to be \.. ; 1. Exchanged a car from invent as a long term asset 300,009 mount of the car 450.04, Pua teltie price of the car 430.00, i computer 50. Feb ae by Cherish Company 000 kaging machine which cost P240,00) : a er ealad for new machine and paid a cash difference of P30,000. i ine is determined i of the old packaging machine is n Te. O00 and the list price of the new machine is P150,000. i i 00 with . Exchanged an old equipment costing P3,000,0 accumulated depreciation of P1,800,000 and fair value of P1,000,000 for another used equipment with fair value of 1,200,000. The exchange is nonmonetary. Required: Prepare journal entries to record the transactions, Problem 23-7 (ACP) Smile Company exchan, equipment of Frown Cor pertains to the exchange: ged used equipment for another mpany. The following information Smile Frown seats depreciatio 2,400,000 2,200,000 Fairvalue ofequipment Hone. one 1,750,000 000 500,000 Required: Prepare journal entry on the books of Smile and Frow: n, 654Problem 23-8 (AICPA Adapted) i newer Lecherous Company traded a used equipment for a model with a dealer. Old equipment: 1 1,000,000 Original cost Sood Accumulated depreciation 601 Fair value — unknown New equipment: List price 1,600,000 Cash price without trade in 11400,000 Cash payment with trade in 5 Required: Prepare journal entry to record the’ exchange transaction. Problem 23-9 (IAA) Mellow Company acquired a delivery truck, making payment of P2,680,000, the payment being analyzed as follows: Price of truck 2,500,000 Charge for extra equipment 50,000 Value added tax 300,000, Insurance for one year 120,000 Motor vehiale registration 10,000 Total 2,980,000 Less: Trade in value allowed on old truck 300,000 Cash paid ‘geo 00 2,680,000 The old truck cost P1,500,000 and hi rryiny P200,000, and fai: value of P50,001 The melded tae oe 0. TY : refundable or recoverable, he value added tax is Required: Prepare journal entry to record the ‘exchange transaction, 655.Problem 23-10 (IAA) Gratitude Company provided the following informatio, relation to the construction of a building during the yeay. |” Total Finished goods Buildi,., Direct labor 6,000,000 / 4,200,000 1,800, 04, Materials 7,000,000 3,000,000 4,000, 06, Overhead 2,000,000 2 > The following assumptions are made: 1. No overhead is to be assigned to the building. 2. Normal production of finished goods is 180,000 unit, Because of the construction of the building, finished goo,, production totaled only 135,000 units. The building is to charged with the overhead which would have been charge; to the 45,000 units which were not produced. 3. Overhead is to be apportioned in the ratio of direct labor. Required: Compute the cost of finished goods and building Problem 23-11 (IAA) Acrophobia Company summarized the following manufacturing and construction activities for 2020: Finished goods Machinery Materials 3,000,000 500,000 Direct labor 4,000,000 1,000,000 Overhead for the prior year was 75% of the direct labor cost. Overhead in 2020 related to both product manufacture and construction activities amounted to P3,600,000. Required: a. Calculate the cost of the machinery, assuming that manufacturing activities are to be charged with overhead at the rate experienced in the prior year. b. Calculate the cost of the machinery if manufacturing and construction activities are to be ch: id wil at the same rate. eee eeaeaeeat 656Problem 23-12 (IAA) During the year, Storm Company purchased a new machine. A 120,000 down payment was made and three monthly installments of P360,000. The cash price would have been P1,160,000. ‘The entity paid no installation charges under the monthly ayment plan but a P20,000 installation charge would have Goon incurred with a cash purchace. What amount should be capitalized as cost of the machine? a. 1,220,000 b. 1,200,000 e. 1,180,000 d, 1,160,000 Problem 23-13 (AICPA Adapted) Grey Company acquired a machine with a cash price of Down payment 400,000 Note payable in 3 equal annual installments 1,200,000 20,000 shares of Grey Company at fair value 800,000 Prior to use, installation cost of P50,000 was incurred. The machine has a residual value of P100,000. What is the initial measurement of the new machine? d. 2;450,000 Problem 23-14 (IAA) Corner Company puchased a van with a list price of 3,000,000. The dealer granted a 15% reduction in list price and an additional 10% cash discount on the net price if payment is made in 30 days. Irrecoverable taxes amounted to P40,000 and the entity paid an extra P30,000 to have a special horn installed. -What amount should be recorded as initial cost of the van? a. 2,550,000 ‘b. 2,335,500 ©., 2.365,000 ad. 2,325,000 657Problem 28-15 (AICPA Adapted) On December 31, 2020, Bart Company purchased a Machin, in exchange for a noninterest bearing note requiring ¢;,1 payments of P200,000. ‘The first payment was made on December 81, 2020 ,,,, the others are due annually on December 31. ‘At date of issuance, the prevailing rate of interest for thi, type of note was 11%. PV of an ordinary annuity of 1 at 11% for 8 periods 5.146 PV of an annuity of 1 in advance at 11% for 8 periods 5.712 1. What amount should be recorded as initial cost of the machine? a. 1,600,000 b. 1,029,200 c. 1,400,000 d. 1,142,400 What is the discount on note payable on December 31, 2020? a. 657,600 b. 457,600 ec. 570,800 d. 0 What is the interest expense for 2021? 2 a. 125,664 b. 103,664 e. 113,212 d. 176,000 4, What is the carrying amount of note mn December 381, 2021? pope a. 942,400 b. 846,064 c. 742,400 d. 742,412 658Problem 23-16 (IAA) Allison Company [At the beginning of current year, D aie machine on a deferred payment basis. made and four an! e to be made every f the machine was purchased ‘A down payment of P200,000 was nual installments of P600,000 each an year-end. The cash equivalent price 2,300,000. Due to an employee strike, the machine immediately and thus i cost, Cost of installation excluding the stora\ to P80,000. What is the initial amount to be capitalized as th the machine? entity could not install the incurred P30,000 of storage ge cost amounted e cost of a. 2,300,000 b. 2,380,000 ce. 2,410,000 d. 2,600,000 Problem 23-17 (IAA) Lax Company recently acquired two items of equipment. * Acquired a press at an invoice price of P3,000,000 subject to a 5% cash discount which was taken. Costs of freight and insurance during shipment were P50,000 and installation cost amounted to P200,000. * Acquired a welding machine at an invoice price of 2,000,000 subject to a 10% cash discount which was not taken. Additional welding supplies were acquired at a cost of P100,000. Whats the total increase in the equipment account as a result of the transactions? 4,900,000 5,000,000 5,100,000 |. 55200,000 Be oe 659