Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Allocating Payments and Receipts to Fixed Asset Accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in

Allocating Payments and Receipts to Fixed Asset Accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.

a. Fee paid to attorney for title search $3,700
b. Cost of real estate acquired as a plant site: Land 392,800
Building (to be demolished) 37,300
c. Delinquent real estate taxes on property, assumed by purchaser 22,100
d. Cost of tearing down and removing building acquired in (b) 6,200
e. Proceeds from sale of salvage materials from old building 3,700*
f. Special assessment paid to city for extension of water main to the property 14,700
g. Architects and engineers fees for plans and supervision 54,000
h. Premium on one-year insurance policy during construction 5,200
i. Cost of filling and grading land 21,600
j. Money borrowed to pay building contractor 921,100*
k. Cost of repairing windstorm damage during construction 6,800
l. Cost of paving parking lot to be used by customers 18,700
m. Cost of trees and shrubbery planted 11,100
n. Cost of floodlights installed on parking lot 1,300
o. Cost of repairing vandalism damage during construction 3,000
p. Proceeds from insurance company for windstorm and vandalism damage 7,400*
q. Payment to building contractor for new building 982,000
r. Interest incurred on building loan during construction 46,200
s. Refund of premium on insurance policy (h) canceled after 11 months 433*

Required:

1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Choose the correct account from the dropdown list for each letter and enter the appropriate amount. Enter receipts as negative amounts using the minus sign.

Item Account Amount
a. Land $fill in the blank 2
b. Land $fill in the blank 4
c. Land $fill in the blank 6
d. Land $fill in the blank 8
e. Land $fill in the blank 10
f. Land $fill in the blank 12
g. Building $fill in the blank 14
h. Building $fill in the blank 16
i. Land $fill in the blank 18
j. Other Accounts $fill in the blank 20
k. Other Accounts $fill in the blank 22
l. Land Improvements $fill in the blank 24
m. Land Improvements $fill in the blank 26
n. Land Improvements $fill in the blank 28
o. Other Accounts $fill in the blank 30
p. Other Accounts $fill in the blank 32
q. Building $fill in the blank 34
r. Building $fill in the blank 36
s. Building $fill in the blank 38

2. Determine the amount debited to Land, Land Improvements, and Building.

Land Land Improvements Building
$fill in the blank 39 $fill in the blank 40 $fill in the blank 41

3. Since land used as a plant site does not lose its ability to provide services, it is not depreciated. Land improvements do lose their ability to provide services as time passes and are, therefore, depreciated .

4. What would be the effect on the current years income statement and balance sheet if the cost of filling and grading land of $21,600 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume that Land Improvements are depreciated over a 20-year life using the double-declining-balance method.

Depreciation expense would be overstated & Land improvements would be overstated.

Feedback

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Industrial Organizational Psychology An Applied Approach

Authors: Michael Aamodt

7th Edition

1111839972, 9781111839970

More Books

Students also viewed these Accounting questions

Question

What applied experiences do you have? (For Applied Programs Only)

Answered: 1 week ago