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(a) On January 1, 2007, Sandstone Corporation sold a building that cost $250,000

Question # 00375766
Subject: Accounting
Topic: Accounting
Due on: 09/01/2016
Posted On: 09/01/2016 02:26 AM

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SIMULATION 1
Chapter 6
Develop a response in either Word or Excel and follow the instructions outlined in the Assignments Menu for submission.
Answer each of the following unrelated questions:
(a) On January 1, 2007, Sandstone Corporation sold a building that cost $250,000
and had accumulated depreciation of $100,000 on the date of sale. A $300,000
non-interest-bearing note due on January 1, 2013 was received as consideration.
The prevailing rate of interest for a note of this type on January 1, 2007 was
11%. At what amount should the gain from the sale of the building be reported?
(b) On January 1, 2001, Sandstone Corporation purchased $200,000 face value,
9%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2011, and
pay interest annually beginning January 1, 2002. The market rate of interest is
11%. How much did Sandstone pay for the bonds?
(c) Sandstone Corporation brought a new machine and agreed to pay for it in equal
annual installments of $4,000 at the end of each of the next 10 years. Assume an
11% market rate of interest applies to this contract, how much was recorded as
the cost of the machine?
(d) Sandstone Corporation purchased a special tractor on December 31, 2013. The
purchase agreement stipulated that Sandstone should pay $20,000 at the time of
purchase and $5,000 at the end of each of the next 8 years. The tractor should
be recorded on December 31, 2013, at what amount, assuming the market rate
of interest was 11%?
(e) Sandstone Corporation wants to withdraw $100,000 from an investment fund at
the end of each year for 9 years. What should be the required initial investment
at the beginning of the first year if the fund earns 11%?
11% Interest Table Factors

Period

Present Value of
$1
(Table 6-2)

Present Value of an
Ordinary Annuity of $1
(Table 6-4)

6
7
8
9
10

.53464
.48166
.43393
.39092
.35218

4.23054
4.71220
5.14612
5.53705
5.88923
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(a) On January 1, 2007, Sandstone Corporation sold a building that cost $250,000

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