Adama Company incurred the following costs. Indicate to which account Adama woul

Question

Adama Company incurred the following costs.

Indicate to which account Adama would debit each of the costs.

Sales tax on factory machinery purchased

Painting of and lettering on truck immediately upon purchase

Installation and testing of factory machinery

Real estate broker’s commission on land purchased

Insurance premium paid for first year’s insurance on new truck

Cost of landscaping on property purchased

Cost of paving parking lot for new building constructed

Cost of clearing, draining, and filling land

Architect’s fees on self-constructed building

1.

Sales tax on factory machinery purchased

$ 5,000 Select the account to be debited

EquipmentPrepaid InsuranceBuildingLandLand Improvements

2.

Painting of and lettering on truck immediately upon purchase

700 Select the account to be debited

LandPrepaid InsuranceEquipmentBuildingLand Improvements

3.

Installation and testing of factory machinery

2,000 Select the account to be debited

Prepaid InsuranceBuildingLandEquipmentLand Improvements

4.

Real estate broker’s commission on land purchased

3,500 Select the account to be debited

LandLand ImprovementsPrepaid InsuranceBuildingEquipment

5.

Insurance premium paid for first year’s insurance on new truck

880 Select the account to be debited

LandEquipmentPrepaid InsuranceLand ImprovementsBuilding

6.

Cost of landscaping on property purchased

7,200 Select the account to be debited

EquipmentLand ImprovementsLandBuildingPrepaid Insurance

7.

Cost of paving parking lot for new building constructed

17,900 Select the account to be debited

Land ImprovementsLandBuildingPrepaid InsuranceEquipment

8.

Cost of clearing, draining, and filling land

13,300 Select the account to be debited

Prepaid InsuranceLandLand ImprovementsBuildingEquipment

9.

Architect’s fees on self-constructed building

10,000

Explanation / Answer

1.Equipment

2.Equipment

3.Equipment

4.Land

5.Prepaid Insurance

6.Land Improvements

7.Land Improvements

8.Land

9.Buildings

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