Problem 10-3 Metlock Company was incorporated on January 2, 2018, but was unable to begin manufacturing activities until July 1, 2018, because new factory facilities were not completed until that date.

The Land and Buildings account reported the following items during 2018.

January 31 Land and building $165,400

February 28 Cost of removal of building 9,985

May 1 Partial payment of new construction 63,000

May 1 Legal fees paid 4,430 June 1 Second payment on new construction 44,300

June 1 Insurance premium 2,280

June 1 Special tax assessment 4,080

June 30 General expenses 36,182

July 1 Final payment on new construction 32,550

December 31 Asset write-up 56,854 419,061

December 31 Depreciation-2018 at 1% (4,003 )

December 31, 2018 Account balance $415,058

The following additional information is to be considered.

1. To acquire land and building, the company paid $85,400 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $113 per share.

2. Cost of removal of old buildings amounted to $9,985, and the demolition company retained all materials of the building.

3. Legal fees covered the following.

Cost of organization $700

Examination of title covering purchase of land 1,550

Legal work in connection with construction contract 2,180 $4,430

4. Insurance premium covered the building for a 2-year term beginning May 1, 2018.

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, 2018, to June 30, 2018.

Presidents salary $31,892

Plant superintendents salary-supervision of new building 4,290 $36,182

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 $56,854, 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 2018-1% of asset value (1% of $400,300, or $4,003).

Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2018. (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

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2.

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Show the proper presentation of land, buildings, and depreciation on the balance sheet at December 31, 2018. (Round answers to 0 decimal places, e.g. 5,275.)

Metlock Company Balance Sheet December 31, 2018