eBook 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 $2,000 b Cost of real estate acquired as a plant site Land 285,000 Building (to be demolished) 55,000 c Delinquent real estate taxes on property, assumed by purchaser 15,500 d Cost of razing and removing building acquired in (b) 4,000 e Proceeds from sale of salvage materials from old building 5,000 f Special assessment paid to city for extension of water main to the property 30,000 g Architects and engineers fees for plans and supervision 50,000 h Premium on one year insurance policy during construction 5,000 i Cost of filling and grading land 13,000 j Money borrowed to pay building contractor 900,000 k Cost of repairing windstorm damage during construction 5,500 l Cost of paving parking lot to be used by customers 33,000 m Cost of trees and shrubbery planted 10,000 n Cost of floodlights installed on parking lot 2,000 o Cost of repairing vandalism damage during construction 2,500 p Proceeds from insurance company for windstorm and vandalism damage 7,000 q Payment to building contractor for new building 900,000 r Interest incurred on building loan during construction 35,000 s Refund of premium on insurance policy (h) canceled after 11 months 600 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 Land used as a plant site doesdoes not lose its ability to provide services thus, it isis not depreciated However, land improvements dodo not lose their ability to provide services as time passes and are, therefore, not depreciateddepreciated 4 What would be the effect on the income statement and balance sheet if the cost of filling and grading land of $13,000 payment (i) was incorrectly classified as Land Improvements rather than Land Assume Land Improvements are depreciated over a 20 year life using the doubledeclining balance method Depreciation expense would be overstated, land would be understated, and net income would be understated Depreciation expense would be overstated, land improvements would be overstated and net income would be overstated Check My Work

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 11, 2024

eBook Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use

eBook

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	$2,000
b.	Cost of real estate acquired as a plant site: Land	285,000
	Building (to be demolished)	55,000
c.	Delinquent real estate taxes on property, assumed by purchaser	15,500
d.	Cost of razing and removing building acquired in (b)	4,000
e.	Proceeds from sale of salvage materials from old building	5,000	*
f.	Special assessment paid to city for extension of water main to the property	30,000
g.	Architects and engineers fees for plans and supervision	50,000
h.	Premium on one-year insurance policy during construction	5,000
i.	Cost of filling and grading land	13,000
j.	Money borrowed to pay building contractor	900,000	*
k.	Cost of repairing windstorm damage during construction	5,500
l.	Cost of paving parking lot to be used by customers	33,000
m.	Cost of trees and shrubbery planted	10,000
n.	Cost of floodlights installed on parking lot	2,000
o.	Cost of repairing vandalism damage during construction	2,500
p.	Proceeds from insurance company for windstorm and vandalism damage	7,000	*
q.	Payment to building contractor for new building	900,000
r.	Interest incurred on building loan during construction	35,000
s.	Refund of premium on insurance policy (h) canceled after 11 months	600	*

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. Land used as a plant site

doesdoes not

lose its ability to provide services; thus, it

isis not

depreciated. However, land improvements

dodo not

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

not depreciateddepreciated

4. What would be the effect on the income statement and balance sheet if the cost of filling and grading land of $13,000 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume Land Improvements are depreciated over a 20-year life using the doubledeclining- balance method.

Depreciation expense would be overstated, land would be understated, and net income would be understated.Depreciation expense would be overstated, land improvements would be overstated and net income would be overstated.

Check My Work