Skysong Supply Company, a newly formed corporation, incurred the following expen

Question

Skysong Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

$22,000

6,050

Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Company uses net method to record discount.

Abstract company’s fee for title search $572 Architect’s fees 3,487 Cash paid for land and dilapidated building thereon 95,700 Removal of old building

$22,000

   Less: Salvage

6,050

15,950 Interest on short-term loans during construction 8,140 Excavation before construction for basement 20,900 Machinery purchased (subject to 2% cash discount, which was not taken) 60,500 Freight on machinery purchased 1,474 Storage charges on machinery, necessitated by noncompletion of    building when machinery was delivered 2,398 New building constructed (building construction took 6 months from    date of purchase of land and old building) 533,500 Assessment by city for drainage project 1,760 Hauling charges for delivery of machinery from storage to new building 682 Installation of machinery 2,200 Trees, shrubs, and other landscaping after completion of building    (permanent in nature) 5,940

Explanation / Answer

Amswer.

Particulars Land Buildings Mach & Equip. Misc. Exp. Abstract Company's fee for title search $572 Architect's fees $3487 Cash paid for land and old building 95700 Removal of old building ($22000 - $6050) 15950 Interest on short term loans during construction 8140 Excavation before construction for basement 20900 Machinery purchased (subject to 2% cash discount, which was not taken) 59290 1210 Freight on machinery purchased 1474 Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2398 New building constructed (building construction took 6 months from date of purchase of land and old building) 533500 Assessment by city for drainage project 1760 Hauling charges for delivery of machinery from storage to new building 682 Installation of machinery 2200 Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5940 Total $119922 $566027 $62964 $4290

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