Peach Company has the following entries in its Building account:

Peach acquired the original property on May 5, 1998. Orange immediately engaged a contractor to construct a new wing on the south end of the building. While the new wing was being constructed, the company leased the second floor as temporary warehouse space to Kellett Company. During this period (July 1 to December 31, 1998), the company installed new machinery costing \(\$ 160,000\) on the first floor of the building. Regular operations began on January 2, 1999.

a. Compute the correct balance for the Buildings account as of December 31, 1999. The company employs a calendar-year accounting period.

b. Prepare the necessary journal entries to correct the records of Peach Company at December 31, 1999. No depreciation entries are required.

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Debits 1998 May 5 1999 5 Jan. 3 Cost of land and building purchased.. Broker fees incident to purchase of land and building $200,000 12,000 15 June 10 Contract price of new wing added to south end Cost of new machinery, estimated life 10 years Real estate taxes for six months ended 6/30/99. 84,000 160,000 3,600 Aug. 10 Cost of building parking lot for employees in back of building. 4,960 Sept. 6 Replacement of windows broken in August 160 Oct. 10 Repairs due to regular usage 2,240 1998 Credits May 24 Transfer to Land account, per allocation of purchase cost authorized in minutes of board of directors. 1999 Jan. 5 Proceeds from lease of second floor for six months ended 12/31/98. 32,000 8,000