Gibbs Manufacturing Co. was incorporated on 1/2/20 but was unable to begin manufacturing activities until 8/1/20 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/20 per the books was as follows: Date Item Amount1/31/20Land and dilapidated building$200,0002/28/20Cost of removing building4,0004/1/20Legal fees6,0005/1/20Fire insurance premium payment5,4005/1/20Special tax assessment for streets4,5005/1/20Partial payment of new building construction210,0008/1/20Final payment on building construction210,0008/1/20General expenses30,00012/31/20Asset write-up 75,000$744,900

Additional information:1. To acquire the land and building on 1/31/20, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $180.

2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.

3. Legal fees covered the following:Cost of organization$2,500Examination of title covering purchase of land2,000Legal work in connection with the building construction 1,500$6,0004. The fire insurance premium covered premiums for a three-year term beginning May 1, 2020.5. General expenses covered the following for the period 1/2/20 to 8/1/20.President's salary$20,000Plant superintendent covering supervision of new building 10,000$30,000

4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2020.

5. General expenses covered the following for the period 1/2/20 to 8/1/20.President's salary$20,000Plant superintendent covering supervision of new building 10,000$30,000

6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.InstructionsDetermine the proper balances as of 12/31/20 for a separate land account and a separate buildings account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations.

Instructions

Determine the proper balances as of 12/31/20 for a separate land account and a separate buildings account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations.