Exercise 10-5

Ben Sisko Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract companys fee for title search $520

Architects fees 3,170

Cash paid for land and dilapidated building thereon 87,000

Removal of old building $20,000

Less: Salvage 5,500 14,500

Interest on short-term loans during construction 7,400

Excavation before construction for basement 19,000

Machinery purchased (subject to 2% cash discount, which was not taken) 55,000

Freight on machinery purchased 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 620

Installation of machinery 2,000

Trees, shrubs, and other landscaping after completion of building

(permanent in nature) 5,400

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. Company uses net method to record discount. (Please leave spaces blank if there is no answer. Do not enter zeros in those spaces.)

Land Buildings Machinery and Equipment Other

Abstract companys $ $ $ $

fee for title search

Architects fees

Cash paid for land and old building

Removal of old building

Interest on short-term loans during construction

Excavation before construction for basement

Machinery purchased

Freight on machinery purchased

Storage charges on machinery

New building constructed

Assessment by city for drainage project

Hauling charges

Installation of machinery

Trees, shrubs, and other landscaping