Below are transactions related to Impala Company. (a) The City of Pebble Beach g

Question

Below are transactions related to Impala Company.

(a)
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $84,100. (b)
14,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $841,000, of which $189,100 has been allocated to land and $651,900 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share. (c)
No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Below are transactions related to Impala Company. Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Land Dr. 84100

Contribution Revenue Cr. 84100

Part B:

Land Dr. 189100

Buildings Dr. 651900

Common Stock (14000*55) Cr. 770000

Additional Paid in Capital Cr. 71000

Part C:

Machinery Dr. 42666

Materials Cr. 12910

Direct Labor Cr. 16260

Factory Overhead Cr. 13496

Notes: Calculation of Factory Overhead:

Fixed Overhead (60%*16260) = 9756

Add Additional Overhead = 2800

Factory Supplies = 940

Factory Overhead = 13496

Thanls.

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