Bagwell Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $2,500,000 on January 1, 2020. Bagwell expected to complete the building by December 31, 2020. Bagwell has the following debt obligations outstanding during the construction period. Construction loan—15% interest, payable semiannually, issued December 31, 2019 $1,000,000 Short-term loan—10% interest, payable monthly, and principal payable at maturity on May 30, 2021 700,000 Long-term loan—11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 500,000 Instructions Assume that Bagwell completed the office and warehouse building on December 31, 2020, as planned, at a total cost of $2,600,000, and the weighted average of accumulated expenditures was $1,800,000. Compute the amount of interest to be capitalized on this project.

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Scott Company purchased equipment for $350,000 on October 1, 2025. It is estimated that the equipment will have a useful life of 10 years and a salvage value of $60,000. Estimated production is 25,000 units and 15,000 estimated working hours. Scott uses the equipment for 800 hours and 3,700 hours, and the equipment produces 2,500 units and 7,000 units during 2025 and 2026, respectively. Instructions: Compute depreciation expense under each of the following methods for 2025 and 2026 assuming Scott’s year end is December 31. Straight-line method. Activity method (units of output). Activity method (working hours). Sum-of-the-years’-digits method. Double-declining-balance method. Compute the book value of the equipment at December 31, 2026 for each method A. – E.

At December 31, 2025, the available-for-sale debt portfolio for Zorro Foods Corp. is as follows:    December 31, 2025, the fair value adjustment account has a debit balance of $6,400. On January 20, 2026, Zorro sold Apple for $34,100. The sale proceeds are net of brokerage fees. Instructions: Prepare the adjusting entry at December 31, 2025, to report the portfolio at fair value. Prepare the journal entry for the 2026 sale of Apple.

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A Trial Balance:

Journalize the following transactions.  Total your debits and credits to prove that they balance. You may omit descriptions. A business issued common stock for $20,000 cash. Paid $2,500 cash for advertising for the current month. Paid $4,000 cash for office equipment. Purchased $800 of office supplies on account. Recorded $7,000 of revenue, receiving half in cash and half will be received next moth. Note: If it helps to analyze these using the accounting equation, refer to Problem 13.

Match the descriptive statements below to the appropriate element of the financial statements in the dropdown menu.

Part 1:  Multiple Choice (10 points) Please select the one best response for each of the following multiple-choice questions.

Part 2: Matching (20 points)