Question 5.

A. Garland Company incurred the following costs associated with the purchase of a piece of land. What amount should be recorded on the balance sheet for the land?

Sale price of the land	$500,000
Sale of salvaged parts already on land	$10,000
Demolition of the old building	$30,000
Ground breaking ceremony (food and supplies)	$4,300
Land preparation and leveling	$19,500

B. Martin Company purchased equipment for $90,000 on January 1, 2015. The equipment is expected to have a six-year life, with a residual value of $8,000.

Calculate the depreciation for 2015 using the straight line method.

C. A Merchandising company has the following listed transactions during the month of April:

April 1 Purchases inventory on account for $3,500, terms 2/10, n/30.

April 5 Pays freight costs of $200 on inventory purchased on April 1.

April 6 Returns inventory from April 1^st with a cost of $500.

April 9 Pays the full amount due on the April 1st purchase.

April 29 Sells all inventory purchased on April 1st (less those returned on April 6) for $6,000, on account (hint: you need two journal entries).

Record all transactions, assuming the company uses a perpetual inventory system.