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 $$3,200$

b$.$ Cost of real estate acquired as a plant site: Land $332,300$

Building $($to be demolished$)31,600$

c$.$ Delinquent real estate taxes on property, assumed by purchaser $18,700$

d$.$ Cost of tearing down and removing building acquired in $($b$)5,200$

e$.$ Proceeds from sale of salvage materials from old building $3,100*$

f$.$ Special assessment paid to city for extension of water main to the property $12,500$

g$.$ Architect$$s and engineer$$s fees for plans and supervision $45,700$

h$.$ Premium on one$-$year insurance policy during construction $4,400$

i$.$ Cost of filling and grading land $18,300$

j$.$ Money borrowed to pay building contractor $779,300*$

k$.$ Cost of repairing windstorm damage during construction $5,700$

l$.$ Cost of paving parking lot to be used by customers $15,800$

m$.$ Cost of trees and shrubbery planted $9,400$

n$.$ Cost of floodlights installed on parking lot $1,100$

o$.$ Cost of repairing vandalism damage during construction $2,600$

p$.$ Proceeds from insurance company for windstorm and vandalism damage $6,200*$

q$.$ Payment to building contractor for new building $830,800$

r$.$ Interest incurred on building loan during construction $39,000$

s$.$ Refund of premium on insurance policy $($h$)$ canceled after $11$ months $367*$

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$.$

$fill in the blank $2$

b$.$

$fill in the blank $4$

c$.$

$fill in the blank $6$

d$.$

$fill in the blank $8$

e$.$

$fill in the blank $10$

f$.$

$fill in the blank $12$

g$.$

$fill in the blank $14$

h$.$

$fill in the blank $16$

i$.$

$fill in the blank $18$

j$.$

$fill in the blank $20$

k$.$

$fill in the blank $22$

l$.$

$fill in the blank $24$

m$.$

$fill in the blank $26$

n$.$

$fill in the blank $28$

o$.$

$fill in the blank $30$

p$.$

$fill in the blank $32$

q$.$

$fill in the blank $34$

r$.$

$fill in the blank $36$

s$.$

$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

lose its ability to provide services, it

depreciated. Land improvements

lose their ability to provide services as time passes and are, therefore,

$.$

$4.$ What would be the effect on the current year$$s income statement and balance sheet if the cost of filling and grading land of $$18,300[$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.