Problem 10-1 At December 31, 2016, certain accounts induded in the property, pla
ID: 2334753 • Letter: P
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Problem 10-1 At December 31, 2016, certain accounts induded in the property, plant, and equipment Land Buildings Leasehold improvements Equipment $239,300 895,600 663,700 875,800 During 2017, the following transactions occurred 1. Land site number 621 was acquired for $859,600. In addition, to acquire the land Sandhill paid a s51,900 commisslon to a clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $14,900. 2. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement The closing statement indicated that the land value was $299,900 and the building value was $120,100. Shortly after acquisition, the building was demolished at a cost of $41,100. A new building was constructed for $329,700 plus the following costs Excavation fees $38,400 10,900 2,400 Architectural design fees Building permit fee Imputed interest on funds used during construction (stock financing) 8,400 The building was completed and occupied on September 30, 203 3. A third tract of land (site number 623) was acqvuired for $652,500 and was put on the 4. During Decemb er 2017, costs of $89, 400 were incurred to improve leased office space. The related lease will terminate on renewed. (Hint: Leasehold improvements should be handled in the same manner as land i under a royalty agreement that provides for payment of royalties based on units of production for 2017 were $17,300.Explanation / Answer
Sandhill company
Land account
$
$
$
Balance January 1
239300
Lad site number 621
Acquistion cost
859600
commission paid for real estate
51900
clearing land
44400
Less: Amount recovered
-14900
29500
941000
Total land site number 621
1180300
Land site number 622
Land value
299900
Bulding value
120100
Demolition cost
41100
Total land site number 622
461100
Balance at December 31 2017
1641400
Building account
Balance janaury 1 2017
895600
Cost of new building constructed on land number 622
Costruction costs
329700
Excavation costs
38400
Architectural design fees
2400
Building permit fees
8400
378900
1274500
Leasehold account
Balance on january 1 2017
663700
Office space
89400
Balance at december 31 2017
753100
Machinery and equipment
Balance january 1 2017
875800
Cost of new machines acquired
Invoice
86300
Freight costs
3300
Installation costs
2400
92000
Balance at december 31 2017
967800
Royalty is included in income statement should not be included in balance sheet
Land
1641400
Buildings
1274500
Leasehold improvements
753100
Equipment
967800
Sandhill company
Land account
$
$
$
Balance January 1
239300
Lad site number 621
Acquistion cost
859600
commission paid for real estate
51900
clearing land
44400
Less: Amount recovered
-14900
29500
941000
Total land site number 621
1180300
Land site number 622
Land value
299900
Bulding value
120100
Demolition cost
41100
Total land site number 622
461100
Balance at December 31 2017
1641400
Building account
Balance janaury 1 2017
895600
Cost of new building constructed on land number 622
Costruction costs
329700
Excavation costs
38400
Architectural design fees
2400
Building permit fees
8400
378900
1274500
Leasehold account
Balance on january 1 2017
663700
Office space
89400
Balance at december 31 2017
753100
Machinery and equipment
Balance january 1 2017
875800
Cost of new machines acquired
Invoice
86300
Freight costs
3300
Installation costs
2400
92000
Balance at december 31 2017
967800
Royalty is included in income statement should not be included in balance sheet
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