A) Blossom Co. purchased land as a factory site for $504,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months.

The company paid $52,920to raze the old buildings and sold salvaged lumber and brick for $7,938. Legal fees of $2,331were paid for title investigation and drawing the purchase contract. Blossom paid $2,772to an engineering firm for a land survey, and $85,680for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,890, and a liability insurance premium paid during construction was $1,134. The contractor's charge for construction was $3,452,400. The company paid the contractor in two installments: $1,512,000at the end of3months and $1,940,400upon completion. Interest costs of $214,200were incurred to finance the construction.

Determine the cost of the land and the cost of the building as they should be recorded on the books of Blossom Co. Assume that the land survey was for the building.

Cost of the Land$

Cost of the Building$

B) At December 31, 2016, certain accounts included in the property, plant, and equipment section of Buffalo Company's balance sheet had the following balances.

Land$238,200Buildings905,200Leasehold improvements661,900Equipment883,800

During 2017, the following transactions occurred.

1.Land site number 621 was acquired for $850,800. In addition, to acquire the land Buffalo paid a $53,000commission to a real estate agent. Costs of $36,200were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $20,400.2.A second tract of land (site number 622) with a building was acquired for $417,500. The closing statement indicated that the land value was $297,500and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $331,400plus the following costs.

Excavation fees$37,700Architectural design fees11,100Building permit fee2,500Imputed interest on funds used during construction (stock financing)8,600

The building was completed and occupied on September 30, 2017.

3.A third tract of land (site number 623) was acquired for $650,800and was put on the market for resale.4.During December 2017, costs of $89,300were incurred to improve leased office space. The related lease will terminate on December 31, 2019, and is not expected to be renewed. (Hint:Leasehold improvements should be handled in the same manner as land improvements.)5.A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $86,200, freight costs were $3,300, installation costs were $2,300, and royalty payments for 2017 were $17,600.

(a)Calculate the balance at December 31, 2017 in each of the following balance sheet accounts. Disregard the related accumulated depreciation accounts.

Balance at December 31, 2017

Land$

Buildings$

Leasehold Improvements$

Equipment$

C) On December 31, 2016, Nash Inc. borrowed $4,260,000at12% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building: March 1, $511,200; June 1, $852,000; July 1, $2,130,000; December 1, $2,130,000. The building was completed in February 2018. Additional information is provided as follows.

1.Other debt outstanding 10-year,13% bond, December 31, 2010, interest payable annually$5,680,0006-year,10% note, dated December 31, 2014, interest payable annually$2,272,0002.March 1, 2017, expenditure included land costs of $213,0003.Interest revenue earned in 2017$69,580

(a)

Determine the amount of interest to be capitalized in 2017 in relation to the construction of the building.

The amount of interest$