MM corporation had the following transactions 1) aquired land with a building pa
ID: 2505100 • Letter: M
Question
MM corporation had the following transactions
1) aquired land with a building paying $100,000 cash and issuing 1,000 shared of its $100 par value common stock that is actively trade and was slling at $170 per shared
2) the building was demolished and MM paid K Demolition $4,000 MM received $1,500 from the sale of salvage material.
3) the legal fees paid total $6,000 of which $4,500 was for little search for the land and $1,500 for legal work in regard to the construction of the building
4) the total cost of constructon of the building was $300,000
5) the company paid $5,40 for fired insurance covering a three-year period
6) there was a special tax assesment from the township pf $4,500
7) salaries totad $30,000 and consisted of the president salary of $20,000 and $10,000 for the supervisor of construction for the new building
REQUIRED
Prepare all necessary jornal entries and post them to the appropriate ledger accounts
Explanation / Answer
Journal Entries Debit Credit 1 Land & Building $ 200,000.00 To cash $ 100,000.00 To Common stock $ 100,000.00 2 Demolition charges $ 4,000.00 To cash $ 4,000.00 Cash $ 1,500.00 To building (salvage value) $ 1,500.00 Loss from demolition $ 198,500.00 To Building $ 198,500.00 3 Land $ 4,500.00 Building $ 1,500.00 To legal fees $ 6,000.00 Legal fees $ 6,000.00 To bank $ 6,000.00 4 Building a/c $ 300,000.00 To cost of construction $ 300,000.00 5 Insurance charges a/c $ 180.00 Prepaid Insurance $ 360.00 To bank $ 540.00 6 Special tax assessment $ 4,500.00 To Special tax assessment payable $ 4,500.00 7 Salaries a/c $ 30,000.00 To presidents salary $ 20,000.00 To supervisors salaray $ 10,000.00
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