Spitfire Company was incorporated on January 2, 2011, but was unable to begin manufacturing activities until July 1, 2011, because new factory facilities were not completed until that date. The Land and Building account reported the following items during 2011. January 31 Land and building $162,500 February 28 Cost of removal of building 9,950 May 1 Partial payment of new construction 61,100 May 1 Legal fees paid 4,360 June 1 Second payment on new construction 41,700 June 1 Insurance premium 2,136 June 1 Special tax assessment 4,200 June 30 General expenses 41,800 July 1 Final payment on new construction 31,500 December 31 Asset write-up 62,300 421,546 December 31 Depreciation-2011 at 1% 4,059 December 31, 2011 Account balance $417,487

The following additional information is to be considered.

1. To acquire land and building the company paid $80,900 cash and 800 shares of its 8% cumulative preferred stock, par value $102 per share. Fair market value of the stock is $122 per share.
2. Cost of removal of old buildings amounted to $9,950, and the demolition company retained all materials of the building.
3. Legal fees covered the following.

Cost of organization $700

Examination of title covering purchse of land 1,660

Legal work in connection with construction contract 2,000

$4,360

4. Insurance premium covered the building for a 2-year term beginning May 1, 2011.

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, 2011, to June 30, 2011.

President's salary $37,100

Plant superintendent covering supervision of a new building 4,700

$41,800

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 $62,300, 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.

9. Depreciation for 2011 - 1% of asset value (1% of $405,900, or $4,059).

Prepare entries to reflect correct land, building, and depreciation accounts at December 31, 2011.

Land Debit ??

____?? Debit ??

____?? Debit ??

____?? Debit ??

____?? Debit ??

____?? Debit ??

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Additional paid-in capital Credit ??

____ ?? Credit ??

____?? Debit ??

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Show the proper presentation of land, building, and depreciation on the balance sheet at December 31, 2011.

Property, Plant, and Equipment

_____?? $ ??

_____?? $??

Less: _____?? $??

Total: $ ??