Ivanhoe Company was incorporated on January 2, 2021, but was unable to begin manufacturing activities until July 1, 2021, because new factory facilities were not completed until that date. The Land and Buildings account reported the following items during 2021. $168,400 9,825 61,680 4,600 47,500 January 31 February 28 May 1 May 1 June 1 June 1 June 1 June 30 July 1 December 31 Land and buildings Cost of removal of building Partial payment of new construction Legal fees paid Second payment on new construction Insurance premium Special tax assessment General expenses Final payment on new construction Asset write-up 2.280 3,930 35,708 31.900 58.431 December 31 December 31, 2021 Depreciation-2021 at 1% Account balance 424,254 (4.072 $420,182 The following additional information is to be considered. 1. To acquire land and building, the company paid $88,400 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $110 per share. Cost of removal of old buildings amounted to $9,825, and the demolition company retained all materials of the building. Legal fees covered the following. 2. 3. Cost of organization Examination of title covering purchase of land Legal work in connection with construction contract $620 1,690 2.290 $4,600 4. 5. 6. Insurance premium covered the building for a 2-year term beginning May 1, 2021. The special tax assessment covered street improvements that are permanent in nature. General expenses covered the following for the period from January 2, 2021, to June 30, 2021. President's salary Plant superintendent's salary-supervision of new building $31.810 3,898 $35,708 7. Because of a general increase in construction costs after entering into the building contract, the board of directors increased the value of the building $58,431, believing that such an increase was justified to reflect the current market at the time the building was completed. Retained earnings was credited for this amount Estimated life of building-50 years. Depreciation for 2021-1% of asset value (1% of $407.200, or $4,072). 8. (a) Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2021. (Round answers to 0 decimal places, eg. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter Ofor the amounts.) No. Account Titles and Explanation Debit Credit 1. Land 191845 Buildings 147458 Insurance Expense Prepaid Insurance Organization Expense Retained Earnings Salaries and Wages Expense Land and Buildings Paid-in Capital in Excess of Par-Common Stock 2. Land and Buildings Depreciation Expense Accumulated Depreciation-Buildings Save for Later Last saved 1 minute ago. Attempts: 0 of 1 used Submit Answer Saved work will be auto-submitted on the due date
