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 $3,600 b Cost of real estate acquired as a plant site Land 377,600 Building (to be demolished) 35,900 c Delinquent real estate taxes on property, assumed by purchaser 21,200 d Cost of tearing down and removing building acquired in (b) 5,900 e Proceeds from sale of salvage materials from old building 3,500 f Special assessment paid to city for extension of water main to the property 14,200 g Architects and engineers fees for plans and supervision 51,900 h Premium on one year insurance policy during construction 5,000 i Cost of filling and grading land 20,800 j Money borrowed to pay building contractor 885,600 k Cost of repairing windstorm damage during construction 6,500 l Cost of paving parking lot to be used by customers 17,900 m Cost of trees and shrubbery planted 10,700 n Cost of floodlights installed on parking lot 1,200 o Cost of repairing vandalism damage during construction 2,900 p Proceeds from insurance company for windstorm and vandalism damage 7,100 q Payment to building contractor for new building 944,100 r Interest incurred on building loan during construction 44,400 s Refund of premium on insurance policy (h) canceled after 11 months 417 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 LandLand ImprovementsBuildingOther Accounts $fill in the blank 2 b LandLand ImprovementsBuildingOther Accounts $fill in the blank 4 c LandLand ImprovementsBuildingOther Accounts $fill in the blank 6 d LandLand ImprovementsBuildingOther Accounts $fill in the blank 8 e LandLand ImprovementsBuildingOther Accounts $fill in the blank 10 f LandLand ImprovementsBuildingOther Accounts $fill in the blank 12 g LandLand ImprovementsBuildingOther Accounts $fill in the blank 14 h LandLand ImprovementsBuildingOther Accounts $fill in the blank 16 i LandLand ImprovementsBuildingOther Accounts $fill in the blank 18 j LandLand ImprovementsBuildingOther Accounts $fill in the blank 20 k LandLand ImprovementsBuildingOther Accounts $fill in the blank 22 l LandLand ImprovementsBuildingOther Accounts $fill in the blank 24 m LandLand ImprovementsBuildingOther Accounts $fill in the blank 26 n LandLand ImprovementsBuildingOther Accounts $fill in the blank 28 o LandLand ImprovementsBuildingOther Accounts $fill in the blank 30 p LandLand ImprovementsBuildingOther Accounts $fill in the blank 32 q LandLand ImprovementsBuildingOther Accounts $fill in the blank 34 r LandLand ImprovementsBuildingOther Accounts $fill in the blank 36 s LandLand ImprovementsBuildingOther Accounts $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 does not lose its ability to provide services, it is is not depreciated Land improvements do do not lose their ability to provide services as time passes and are, therefore, depreciated not 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 $20,800 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 Depreciation expense would be overstated Land would be overstated Depreciation expense would be understated Land improvements would be overstated Land would be overstated Net income would be understated

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 30, 2024

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	$3,600
b.	Cost of real estate acquired as a plant site: Land	377,600
	Building (to be demolished)	35,900
c.	Delinquent real estate taxes on property, assumed by purchaser	21,200
d.	Cost of tearing down and removing building acquired in (b)	5,900
e.	Proceeds from sale of salvage materials from old building	3,500*
f.	Special assessment paid to city for extension of water main to the property	14,200
g.	Architects and engineers fees for plans and supervision	51,900
h.	Premium on one-year insurance policy during construction	5,000
i.	Cost of filling and grading land	20,800
j.	Money borrowed to pay building contractor	885,600*
k.	Cost of repairing windstorm damage during construction	6,500
l.	Cost of paving parking lot to be used by customers	17,900
m.	Cost of trees and shrubbery planted	10,700
n.	Cost of floodlights installed on parking lot	1,200
o.	Cost of repairing vandalism damage during construction	2,900
p.	Proceeds from insurance company for windstorm and vandalism damage	7,100*
q.	Payment to building contractor for new building	944,100
r.	Interest incurred on building loan during construction	44,400
s.	Refund of premium on insurance policy (h) canceled after 11 months	417*

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.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 2
b.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 4
c.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 6
d.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 8
e.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 10
f.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 12
g.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 14
h.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 16
i.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 18
j.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 20
k.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 22
l.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 24
m.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 26
n.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 28
o.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 30
p.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 32
q.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 34
r.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 36
s.	LandLand ImprovementsBuildingOther Accounts	$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/does not

lose its ability to provide services, it

is/is not

depreciated. Land improvements

do/do not

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

depreciated/not 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 $20,800 [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./Depreciation expense would be overstated & Land would be overstated./Depreciation expense would be understated & Land improvements would be overstated./Land would be overstated & Net income would be understated.