Thefollowingitemsrepresentexpenditures(orreceipts)
related to the construction of a new home office for Lowrey Company
PSI-1A. Acquisition Cost of Img-Lit'ed Assets The following items represent expenditures (or receipts} related to the construction of a new home ofce for Lowrey Company. a ' ' L ' ' ' $ 173.000 Cost of land sIte. thch Included an old apartment buIldIng appraised at $T5.000 ...... Legal fees. includingfeefortitle search. . . . . . . 2.100 Payment of apartment building mortgage and related interest due at time of sale... 0.300 Payment for delinquent property taxes assumed by the purchaser .................. 5.000 Gostofrazingtheapartmentbuilding......................................... 1T.000 Proceeds from sale of salvaged materials ...................................... [3.000) Grading to establish proper drainageflowon land site. . . . . . . . . . . . . . . . . . . . . . . . . . .. 2.100 Architect's fees on new building ............................................. 300.000 Proceeds from sales of excess dirt (from basement excavation} to owner of adjoining propertytdirtwasusedtofillinalowareaon property] ......................... [2.000] Payment to building contractor. . . . . . 5.000.000 Payment of medical bills of employee accidentally injured 1IIrl'Iile inspecting building construction ........................................................... 1.000 Special assessment for paying city sidewalks {paid to city] ........................ 10.000 Costofpayingdriyewayandpan-tinglot. 25.000 Costofinstallinglightsinparkinglot\" 0.500 Premium for' Insurance on building during construction ........................... 1000 Cost of open house party to celebrate opening of new building ..................... 0.000 Regur'red From the given data, calculate the proper balances for the Land, Building, and Land Improvements amounts of Lowrey Company. P9-5A. Disposal of Plant Asset [tano [Companyr has a used executive charter plane that originally cost $350,000. Straight-line depreciation on the plane has been recorded for six years, 1with an $0,003 ex- pected salvage value at the end of its estimated eight-year useful life. The last depreciation entry was made at the end of the sixth year. Eight months into the seventh year, Citano disposes of the plane. Required Prepare journal entries to record: a. Depreciation expense to the date of disposal. 1.1. Sale of the plane for cash at its book value. c. Sale of the plane for $215,000 cash. 11'. Sale of the plane for $195,000 cash. e. Destruction of the plane in a re. Citano expects a $190,000 insurance settlement. PSI-EA. Journal Entries for Plant Assets During the rst few days of the year, Coast (hmpany entered into the following transactions: 1. Purchased a parcel of land with a building on it for sarcoma cash. The building, which will beused in operations, has an estimated useful life of 25 years and a salvage value of $50,000. The assessed valuations for property tax purposes show the land at $30,000 and the building at $120,000. 2. Paid $31,200 for the construction of an asphalt parking lot for customers. The parking lot is ex- pected to last 12 years and has no salvage value. 3. Paid $25,000 for the construction of a new entrance to the building. 4. Purchased store equipment, paying the invoice price (including seven percent sales tax] of $3,760 in cash. The estimated useful life of the equipment is eight years, and the salvage value is $6,000. 5. Paid $240 freight on the new equipmenL 6. Paid $1 ,650 to repair damages to oor caused when the store equipment was accidentally dropped as it was moved into place. T. Paid $55 for an umbrella holder to place inside front door (customers mayr place wet umbrellas in the holder). The holder is expected to last 20 years. Required :1. Prepare journal entries to record these transactions. 1:. Prepare the December 31 journal entries to record depreciation expense for the year. Double- declining balance depreciation is used for the equipment, and straight-line depreciation is used for the building and parking lot
