Question

Exercise 10-05

Sandhill 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				$728
Architect’s fees				4,438
Cash paid for land and dilapidated building thereon				121,800
Removal of old building		$28,000
Less: Salvage		7,700		20,300
Interest on short-term loans during construction				10,360
Excavation before construction for basement				26,600
Machinery purchased (subject to 2% cash discount, which was not taken)				77,000
Freight on machinery purchased				1,876
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered				3,052
New building constructed (building construction took 6 months from
date of purchase of land and old building)				679,000
Assessment by city for drainage project				2,240
Hauling charges for delivery of machinery from storage to new building				868
Installation of machinery				2,800
Trees, shrubs, and other landscaping after completion of building
(permanent in nature)				7,560

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. (Please leave spaces blank if there is no answer. Do not enter zeros in those spaces.)

		Land		Buildings		Machinery and Equipment		Other
Abstract fees		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Architect’s fees		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Cash paid for land and old building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Removal of old building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Interest on loans during construction		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Excavation before construction		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Machinery purchased		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Freight on machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Storage charges caused by noncompletion of building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
New building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Assessment by city		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Hauling charges - machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Installation - machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Landscaping		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount		$enter a total amount

Answer 1