ACCT 2000 Lecture 18: 10/21 Notes
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In January 2013, Mitzu Co. pays $2,700,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $579,500, with a useful life of 20 years and an $90,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $549,000 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs: |
Cost to demolish Building 1 | $ | 338,400 |
Cost of additional land grading | 187,400 | |
Cost to construct new building (Building 3), having a useful life | 2,282,000 | |
Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value | 173,000 | |
1.
value:
10.00 points
Required information
Required: |
1. | Allocate the costs incurred by Mitzu to the appropriate columns and total each column. |
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2. | Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2.Journal entry worksheet
Record the costs of the plant assets.
Note: Enter debits before credits.
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Venable Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.
Debit | ||||
1. | Cost of filling and grading the land | $ 4,500 | ||
2. | Full payment to building contractor | 680,500 | ||
3. | Real estate taxes on land paid for the current year | 4,500 | ||
4. | Cost of real estate purchased as a plant site (land $115,000 and building $46,500) | 161,500 | ||
5. | Excavation costs for new building | 35,500 | ||
6. | Architectâs fees on building plans | 12,500 | ||
7. | Accrued real estate taxes paid at time of purchase of real estate | 2,000 | ||
8. | Cost of parking lots and driveways | 13,500 | ||
9. | Cost of demolishing building to make land suitable for construction of new building | 26,000 | ||
$940,500 | ||||
Credit | ||||
10. | Proceeds from salvage of demolished building | $ 3,500 |
Analyze the foregoing transactions using the following column headings. Insert the amounts in the appropriate columns. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Item | Land | Buildings | Other Accounts | |||
1. | $ | $ | $ | |||
2. | ||||||
3. | ||||||
4. | ||||||
5. | ||||||
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7. | ||||||
8. | ||||||
9. | ||||||
10. | ||||||
$ | $ | |