Problem 10 3 Crane 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 January 31 Land and buildings $164,600 February 28 Cost of removal of building 9,909 May 1 Partial payment of new construction 62,340 May 1 Legal fees paid 4,460 June 1 Second payment on new construction 44,000 June 1 Insurance premium 2,280 June 1 Special tax assessment 3,780 June 30 General expenses 35,298 July 1 Final payment on new construction 30,160 December 31 Asset write up 48,889 405,716 December 31 Depreciation 2021 at 1 (4,231 ) December 31, 2021 Account balance $401,485 The following additional information is to be considered 1 To acquire land and building, the company paid $84,600 cash and 800 shares of its 8 cumulative preferred stock, par value $100 per share Fair value of the stock is $127 per share 2 Cost of removal of old buildings amounted to $9,909, and the demolition company retained all materials of the building 3 Legal fees covered the following Cost of organization $620 Examination of title covering purchase of land 1,690 Legal work in connection with construction contract 2,150 $4,460 4 Insurance premium covered the building for a 2 year term beginning May 1, 2021 5 The special tax assessment covered street improvements that are permanent in nature 6 General expenses covered the following for the period from January 2, 2021, to June 30, 2021 Presidents salary $31,365 Plant superintendents salary supervision of new building 3,933 $35,298 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 $48,889, 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 8 Estimated life of building 50 years Depreciation for 2021 1 of asset value (1 of $423,100, or $4,231) Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2021 (Round answers to 0 decimal places, e g 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 0 for the amounts ) No Account Titles and Explanation Debit Credit 1 2 Show the proper presentation of land, buildings, and depreciation on the balance sheet at December 31, 2021 (Round answers to 0 decimal places, e g 5,275 ) Crane Company Balance Sheet For the Year Ended December 31, 2021 Add Less

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 24, 2024

Problem 10-3 Crane Company was incorporated on January 2, 2021, but was unable to begin manufacturing activities until July 1, 2021, because new factory facilities

Problem 10-3

Crane 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.

January 31	Land and buildings	$164,600
February 28	Cost of removal of building	9,909
May 1	Partial payment of new construction	62,340
May 1	Legal fees paid	4,460
June 1	Second payment on new construction	44,000
June 1	Insurance premium	2,280
June 1	Special tax assessment	3,780
June 30	General expenses	35,298
July 1	Final payment on new construction	30,160
December 31	Asset write-up	48,889
		405,716
December 31	Depreciation-2021 at 1%	(4,231	)
December 31, 2021	Account balance	$401,485

The following additional information is to be considered.

1.		To acquire land and building, the company paid $84,600 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $127 per share.
2.		Cost of removal of old buildings amounted to $9,909, and the demolition company retained all materials of the building.
3.		Legal fees covered the following.

Cost of organization		$620
Examination of title covering purchase of land		1,690
Legal work in connection with construction contract		2,150
		$4,460

4.		Insurance premium covered the building for a 2-year term beginning May 1, 2021.
5.		The special tax assessment covered street improvements that are permanent in nature.
6.		General expenses covered the following for the period from January 2, 2021, to June 30, 2021.

Presidents salary		$31,365
Plant superintendents salary-supervision of new building		3,933
		$35,298

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 $48,889, 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.
8.		Estimated life of building-50 years. Depreciation for 2021-1% of asset value (1% of $423,100, or $4,231).

Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2021. (Round answers to 0 decimal places, e.g. 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 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.








2.

Show the proper presentation of land, buildings, and depreciation on the balance sheet at December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.)