Mason’s Manufacturing Ltd began operations during 2019. The company had a building constructed and acquired manufacturing equipment during the first 6 months of the year. Manufacturing operations began early in July 2019. The company’s accountant, who was unsure how to treat property, plant and equipment transactions, opened a Property, Plant and Equipment account and debited (credited) that account for all the expenditures and receipts involving assets as shown below (ignore GST).

Required

(a) Prepare a schedule similar to the one below. Analyse each transaction and enter the payment (receipt) in the appropriate column. Total the columns.

(b) Prepare a general journal entry to close the $937 200 balance in the Property, Plant and Equipment account and allocate the amounts to their appropriate accounts.

(c) Prepare an entry to record depreciation expense for half the year to 31 December 2019 on land improvements, building and manufacturing equipment using straight‐line depreciation.
Useful lives and residual values are as follows.

Transcribed Image Text:

1. Cost of real estate purchased: Land Old building 2. Paid for the demolition of the old building to prepare the site for a new one. 3. Paid for taxes in arrears on the property in (1) $113 400 35 000 15 000 6700 600 4. Paid fee for title search on property in (1) 5. Received for sale of salvaged materials from old building 6. Paid architect for designing new building 7. Paid for a temporary fence around the construction site 8. Paid excavation costs for new building 9. Partial payment to building contractor 10. Paid for construction of parking spaces and installation of parking area lights 11. Paid interest on building loan during construction 12. Made final payment to building contractor 13. Paid for manufacturing equipment 14. Paid freight on manufacturing equipment 15. Paid installation costs of manufacturing equipment 17. Received for temporary fencing materials salvaged 16. Paid for removal of temporary fencing around construction site 18. Paid for repair of manufacturing equipment that was damaged during installation Property, Plant and Equipment account balance (4600) 40 000 23 300 84 000 225 000 15 700 18 000 275 000 84 000 1600 2900 1300 (500) 800 $937 200