Exercise 10-5

Vaughn 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				$650
Architects fees				3,963
Cash paid for land and dilapidated building thereon				108,750
Removal of old building		$25,000
Less: Salvage		6,875		18,125
Interest on short-term loans during construction				9,250
Excavation before construction for basement				23,750
Machinery purchased (subject to 2% cash discount, which was not taken)				68,750
Freight on machinery purchased				1,675
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered				2,725
New building constructed (building construction took 6 months from
date of purchase of land and old building)				606,250
Assessment by city for drainage project				2,000
Hauling charges for delivery of machinery from storage to new building				775
Installation of machinery				2,500
Trees, shrubs, and other landscaping after completion of building
(permanent in nature)				6,750

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.

Land Buildings Machinery and Equipment Other Abstract company's fee for title search $ $ $ $ Architect's 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 $