eBook Calculator b. C. 9. 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 apparel business. The receipts are identified by an asterisk. Fee paid to attorney for title search $3,600 Cost of real estate acquired as a plant site: Land 720,000 Building (to be demolished) 60,000 Finder's fee paid to real estate agency 23,400 d. Delinquent real estate taxes on property, assumed by purchaser 15,000 Architect's and engineer's fees for plans for new building 75,000 f. Cost of removing building purchased with land in (b) 10,000 Proceeds from sale of salvage materials from old building 3,400" Cost of Filling and grading land 18,000 i. Premium on one-year insurance policy during construction 8,400 j. Money borrowed to pay building contractor 800,000" k. Special assessment paid to city for extension of water main to the property 13,400 Cost of repairing windstorm damage during construction 3.000 m. Cost of repairing vandalism damage during construction 2.000 Cost of trees and shrubbery planted 14,000 Cost of paving parking lot to be used by customers 21.600 Interest incurred on building loan during construction 40.000 Proceeds from insurance company for windstorm and vandalism damage 4,500 Drument in holding contractar the now toildina. Ann h. 0. Check My Work 2 more Check My Work uses remaining p. 9. Calculator Interest incurred on building loan during construction 40,000 Proceeds from insurance company for windstorm and vandalism damage 4,500 Payment to building contractor for new building 800,000 Refund of premium on insurance policy () canceled after 10 months 1,400 Required: 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited e), 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. S. Item Amount Account Land b. Land 3,600 720,000 X 23,400 Land d. Land Improvements X 1,500 X Building 75,000 V 10,000 f. Land Improvements X 9 Other Accounts X $ -3,400 18,000 h. Land Improvements X Other Accounts X Other Accounts 8,400 $800,000 X $ 13,400 k Building X Check My Work 2 more Check My Work uses remaining Next eBook Calculator m. n 9 J. Other Accounts 300,000 X k Building X 13,400 1. Building X 3,000 Building X 2,000 Other Accounts X 14,000 Building X 21,600 p. Building 40,000 Other Accounts -4,500 Building 800,000 Other Accounts X -1,400 2. Determine the amount debited to Land, Land Improvements, and Building. Land Land Improvements Building 1,494,00 X 59,000 X 1,015,00 X 3. Since land used as a plant site does x lose its ability to provide services, it is depreciated. Land improvements do lose their ability to provide services as time passes and are therefore not depreciated X 4. What would be the effect on the income statement and balance sheet if the cost of paving the parking lot of $21,600 (payment (0)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double decling-balance method. Depreciation expense would be understated, land would be overstated, and net income would be overstated Next Check My Work 2 more Check My Work uses remaining
