Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Road Runner High-Speed Online, Inc. incurred the following costs in acquiring it's property and equipment: A. $250,000 - Purchase price of four acres of land,

Road Runner High-Speed Online, Inc. incurred the following costs in acquiring it's property and equipment:

A. $250,000 - Purchase price of four acres of land, including an old building that will be used for a garage (75% to land and 25% to building).

B. $8,100 - Dirt and leveling of land.

C. $17,650 - Fence around the land.

D. $600 - Attorney fee for title search on the land.

E. $5,900 - Delinquent real estate taxes on the land to be paid by Road Runner.

F. $1,800 - Company signs at front of the company property.

G. $350 - Building permit for sales building.

H. $19,800 - Architect fee for the design of sales building.

I. $923,000 - Construction costs of sales building.

J. $41,800 - Renovation costs of the garage building.

K. $9,000 - Interest during construction on loan for sales building.

L. $6,400 - Trees and shrubs.

M. $52,300 - Parking lot and concrete walks.

N. $7,300 - Lights for the parking lot.

O. $107,100 - Furniture for the sales building.

P. $1,800 - Transportation and installation of furniture.

Q. $40,000 - Supervisory salary of the construction supervisor (85% to sales building; 9% to land improvements; and 6% to garage building).

Road Runner depreciates building over 40 years, land improvements over 20 years, and furniture over 8 years, all on a straight-line basis.

Salvage values are as follows: land improvements, $1,000; sales building, $50,000; garage building, $5,000; and furniture, $2,000.


Requirements:

1. Set up columns for Land, Land Improvements, Sales Building, Garage Building, and Furniture. Listing each cost's description then accounting for it in the appropriate column. Determine the total cost for each column.

2. All construction was complete and the assets were placed in service on 2019. Record full-year depreciation expense for the year ending December 31, 2019.

Step by Step Solution

3.52 Rating (155 Votes )

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Kemp, Jeffrey Waybright

2nd edition

978-0132771801, 9780132771580, 132771802, 132771586, 978-0133052152

More Books

Students also viewed these Accounting questions