The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

a.	Fee paid to attorney for title search	$2,900
b.	Cost of real estate acquired as a plant site: Land	305,200
	Building (to be demolished)	29,000
c.	Finders fee paid to real estate agency	17,200
d.	Delinquent real estate taxes on property, assumed by purchaser	4,800
e.	Architects and engineers fees for plans for new building	2,900
f.	Cost of removing building purchased with land in (b)	11,400
g.	Proceeds from sale of salvage materials from old building	42,000	*
h.	Cost of filling and grading land	4,000
i.	Premium on one-year insurance policy during construction	16,800
j.	Money borrowed to pay building contractor	715,600	*
k.	Special assessment paid to city for extension of water main to the property	5,300
l.	Cost of repairing windstorm damage during construction	14,500
m.	Cost of repairing vandalism damage during construction	8,600
n.	Cost of trees and shrubbery planted	1,000
o.	Cost of paving parking lot to be used by customers	2,400
p.	Interest incurred on building loan during construction	5,700
q.	Proceeds from insurance company for windstorm and vandalism damage	35,900	*
r.	Payment to building contractor for new building	762,900
s.	Refund of premium on insurance policy (i) canceled after 11 months	333	*

Required:

1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Choose the correct account from the dropdown list for each letter and enter the appropriate amount. Enter receipts as negative amounts using the minus sign.

Item	Account	Amount
a.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 2
b.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 4
c.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 6
d.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 8
e.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 10
f.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 12
g.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 14
h.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 16
i.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 18
j.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 20
k.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 22
l.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 24
m.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 26
n.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 28
o.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 30
p.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 32
q.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 34
r.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 36
s.	LandLand ImprovementsBuildingOther Accounts	$fill in the blank 38

2. Determine the amount debited to Land, Land Improvements, and Building.

Land	Land Improvements	Building
$fill in the blank 39	$fill in the blank 40	$fill in the blank 41

3. Since land used as a plant site

doesdoes not

lose its ability to provide services, it

isis not

depreciated. Land improvements

dodo not

lose their ability to provide services as time passes and are, therefore,

not depreciateddepreciated

.

4. What would be the effect on the income statement and balance sheet if the cost of filling and grading land of $16,800 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume Land Improvements are depreciated over a 20-year life using the double-declining-balance method.

Depreciation expense would be overstated & Land would be overstated.Depreciation expense would be overstated & Land improvements would be overstated.Depreciation expense would be understated & Land improvements would be overstated.Land would be overstated & Net income would be understated.