E10.5 (LO 1, 2) (Treatment of Various Costs) Ben Sisko Supply Company, a newly formed corpora- tion, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment. Abstract company's fee for title search $ 520 Architect's fees Cash paid for land and dilapidated building thereon Removal of old building Less: Salvage Interest on short-term loans during construction 3,170 87,000 $20,000 5,500 14,500 7,400 Excavation before construction for basement Machinery purchased (subject to 2% cash discount, which was not taken) Freight on machinery purchased 19,000 55,000 1,340 Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180 New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000 Assessment by city for drainage project 1,600 Hauling charges for delivery of machinery from storage to new building Installation of machinery 620 2,000 Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400 Instructions Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indi- cate how any costs not debited to these accounts should be recorded. Exercises 10-35 Instructions Prepare the appropriate journal entries for the above transactions for Clarkson Corporation. E10.4 (LO 1) (Purchase and Self-Constructed Cost of Assets) Worf Co. both purchases and con- structs various equipment it uses in its operations. The following items for two different types of equip- ment were recorded in random order during the calendar year 2020. Purchase Cash paid for equipment, including sales tax of $5,000 $105,000 2,000 Freight and insurance cost while in transit 3,100 Cost of moving equipment into place at factory 4,000 Wage cost for technicians to test equipment Insurance premium paid during first year of operation on this equipment 1,500 Special plumbing fixtures required for new equipment 8,000 Repair cost incurred in first year of operations related to this equipment 1,300 Construction Material and purchased parts (gross cost $200,000; failed to take 2% cash discount) $200,000 Imputed interest on funds used during construction (stock financing) 14,000 Labor costs Allocated overhead costs (fixed-$20,000; variable-$30,000) Profit on self-construction Cost of installing equipment Instructions Compute the total cost for each of these two pieces of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported. 190,000 50,000 30,000 4,400