Accounting 2 Problems

SoccerBoss
Category:
Accounting
Price: $5 USD

Question description

E10-5 (Treatment of Various Cost) Ben Sisko Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company's fee for title search                                                                             520

Architect's fees                                                                                                              3,170

Cash paid for land and dilipidated building thereon                                                     87,000                                                                               

Removal of old building                                                                      20,000

    Less:Salvage                                                                                   5,500               14,500

Interest on short-term loans during construction                                                           7,400

Excavation before construction for basement                                                              19,000

Machinery purchased (subject to 2% cash discount,                                                   55,000

which was not taken)

Freight on machinery purchased                                                                                   1,340

Storage charges on machinery, necessitated by                                                           2,180

noncompletion of building when machinery was delivered

New building constructed (building construction took 6 months                                 485,000

from date of purchase of land and old building)

Assessment by city for drainage project                                                                        1,600

Hauling charges for delivery of machinery from storage                                                  620

to new building

Installation of machinery                                                                                              2,000

Trees, shrubs, and other landscaping after completion                                              5,400

of building (permanent in nature)

Instructions

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. Indicate how any costs not debited to these accounts be recorded.

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