Question
Sweet Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $138,000 in
Sweet Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $138,000 in cash. In addition, it paid $1,920 in surveying costs and $4,560 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $720 being received from the sale of materials. Architectural plans were also formalized on December 1, 2020, when the architect was paid $38,400. The necessary building permits costing $3,360 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2021 as follows.
Date of Payment | Amount of Payment | |
March 1 | $264,000 | |
May 1 | 333,600 | |
July 1 | 67,200 |
The building was completed on July 1, 2021. To finance construction of this plant, Sweet borrowed $603,600 from the bank on December 1, 2020. Sweet had no other borrowings. The $603,600 was a 10-year loan bearing interest at 10%. Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.)
Debit Credit Account Titles and Explanation Acquisition of Assets 1 and 2 Machinery Equipment Cash Acquisition of Asset 3 Machinery 71,800 Discount on Notes Payable 8200 Cash 20,000 Notes Payable 60,000 Acquisition of Asset 4 Machinery Accumulated Depreciation-Machinery 80,000 Cash 20,000 Machinery 200,000 Gain on Disposal of Machinery Acquisition of Asset 5 Acquisition of Asset 5 Equipment 2200 Common Stock 1600 Paid-in Capital in Excess of Par - Common Stock 600 (To record acquisition of Office Equipment) Land 300,000 Buildings Cash Interest Expense
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