Mund Manufacturing Inc started operations at the

beginning of the #3102

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 face value 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, balance sheet (exclude effects on the cash balance), and cash flow
statement under both the direct and indirect methods.View Solution:
Mund Manufacturing Inc started operations at the beginning of the

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