financail accounting

posted by .

Palomar Paper Products purchased land in 1990 for $15,000 cash. The company has held the land since that time. In 2008 Palomar purchased another tract of land for $15,000 cash. Assume that prices in general increases by 60 percent from 1990 to 2008.

a. Assuming that Palomar made only these two land purchases, what dollar amount would appear in the land account on Palomar’s balance sheet as of December 31, 2008?

b. Palomar used $15,000 cash to make each land purchase. Would $15,000 in 1990 buy the same amount of goods and services as $15,000 in 2008? If not, how much more or less, and why?

b. Palomar used $15,000 cash to make each land purchase. Would $15,000 in 1990 buy the same amount of goods and services as $15,000 in 2008? If not, how much more or less, and why?

  • financail accounting -

    If you were trying to "cut and paste" it rarely works here. You will need to type it all out.

    Sra

  • financail accounting -

    Answer a

    $30,000 amount would appear in the land account on Palomar's balance sheet as of December 31, 2014.

    Answer b

    Palomar used $15,000 cash to make each land purchase. No, it Would not $15,000 in 1996 buy the same amount of goods and services as $15,000 in 2014. As Prices in general increased by 60% from 1996 to 2014. The price of Land purchased in 1996 $15,000, but it price in 2014 would be $15,000 * 1.60 = $24,000

    Answer C

    If the stable dollar assumption were dropped it would affect the company income statement. Palomar Company’s land was a total of 30,000 for both lands but now the cost of both lands together has dropped to $24,000 meaning the company has loss $6,000 ($30,000-$24,000).

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. accounting help

    How to prepare this entries Preparing and posting journal entries; preparing a trial balance Shelton Engineering completed the following transactions in the month of June. a. Shania Shelton, the owner, invested $105,000 cash, office …
  2. accounting 2

    June 30, 2008/2007 Assets Cash- 34,700/23,500 accounts receivable- 101,600/92,300 inventory- 146,300/142,100 Investment-0/50,000 Land-145,000/0 equipment- 215,000/175,500 accumulated depreciation- (53,400)/(41,300) 2008= 594,000 /2007=442,100 …
  3. fiancial accounting

    Palomar Paper Products purchased land in 1990 for $15,000 cash. The company has held the land since that time. In 2008 Palomar purchased another tract of land for $15,000 cash. Assume that prices in general increases by 60 percent …
  4. Accounting

    I need to enter the following into Journal Enteries a) Borrowed $12,000 cash on a short-term note payable dates march 1, 2011 b) Purchased land for future buildings site, paid cash, $9,000. c) Earned $160,000 in Service Revenue for …
  5. Accounting

    Janfer Book Store purchased a new automobile that cost $10,000, made a down payment of $3,000, and signed a note payable for the balance. The entry to record this transaction is: Cash 3,000.00 Note Payable7,000.00 Automobile 10,000.00 …
  6. accounting

    The following costs were incurred by Shumway Company in purchasing land: cash price, $84,000; removal of old building, $5,200; legal fees, $3,000; clearing and grading, $3,500; installation of fence, $3,400. (a) What is the cost of …
  7. Financial Accounting

    1. Post the following transactions of a restaurant to prepare the journal ledger and trial balance. Jan - 2011 Transaction Amount 5 Started the business with cash 2,50,000 10 Deposited in the bank 50,000 15 Purchased tables …
  8. Financial Accounting

    Prepare the general journal entries for the following transactions: Jan 2, 2011 -- Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 cash down and signed a mortgage payable for the balance. …
  9. accounting

    Assume that a company purchases land for $100,000, paying $20,000 cash and borrowing the remainder with a long-term note payable. How should this transaction be reported on a statement of cash flows
  10. accounting

    A company was recently formed with $ 50,000 cash contributed to the company by stock-holders. The company then borrowed $ 20,000 from a bank and bought $ 10,000 of supplies on account. The company also purchased $ 50,000 of equipment …

More Similar Questions