The following payments and receipts are related to land, land improvements, and
ID: 2515998 • Letter: T
Question
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.
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.
2. Determine the amount debited to Land, Land Improvements, and Building.
a. Fee paid to attorney for title search $3,600 b. Cost of real estate acquired as a plant site: Land 720,000 Building (to be demolished) 60,000 c. Finder’s fee paid to real estate agency 23,400 d. Delinquent real estate taxes on property, assumed by purchaser 15,000 e. Architect’s and engineer’s fees for plans for new building 75,000 f. Cost of removing building purchased with land in (b) 10,000 g. Proceeds from sale of salvage materials from old building 3,400* h. Cost of filling and grading land 18,000 i. Premium on one-year insurance policy during construction 8,400 j. Money borrowed to pay building contractor 800,000* k. Special assessment paid to city for extension of water main to the property 13,400 l. Cost of repairing windstorm damage during construction 3,000 m. Cost of repairing vandalism damage during construction 2,000 n. Cost of trees and shrubbery planted 14,000 o. Cost of paving parking lot to be used by customers 21,600 p. Interest incurred on building loan during construction 40,000 q. Proceeds from insurance company for windstorm and vandalism damage 4,500* r. Payment to building contractor for new building 800,000 s. Refund of premium on insurance policy (i) canceled after 10 months 1,400*Explanation / Answer
1&2.
Land Land Improvements Building Other Accounts a. Fee paid to attorney for title search 3600 b. Cost of real estate acquired as a plant site: Land 720000 Building (to be demolished) 60000 c. Finder’s fee paid to real estate agency 23400 d. Delinquent real estate taxes on property, assumed by purchaser 15000 e. Architect’s and engineer’s fees for plans for new building 75000 f. Cost of removing building purchased with land in (b) 10000 g. Proceeds from sale of salvage materials from old building -3400 h. Cost of filling and grading land 18000 i. Premium on one-year insurance policy during construction 8400 j. Money borrowed to pay building contractor -800000 k. Special assessment paid to city for extension of water main to the property 13400 l. Cost of repairing windstorm damage during construction 3000 m. Cost of repairing vandalism damage during construction 2000 n. Cost of trees and shrubbery planted 14000 o. Cost of paving parking lot to be used by customers 21600 p. Interest incurred on building loan during construction 40000 q. Proceeds from insurance company for windstorm and vandalism damage -4500 r. Payment to building contractor for new building 800000 s. Refund of premium on insurance policy (i) canceled after 10 months -1400 Total amount debited 780000 59000 979100Related Questions
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