Question

Culver Landscaping began construction of a new plant on December 1, 2017. On this date, the company purchased a parcel of land for $148,800 in cash. In addition, it paid $1,920 in surveying costs and $3,840 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $960 being received from the sale of materials.

Architectural plans were also formalized on December 1, 2017, when the architect was paid $39,600. The necessary building permits costing $3,360 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2018 as follows.

Date of Payment Amount of Payment

March 1 $259,200

May 1 333,600

July 1 61,200

The building was completed on July 1, 2018.

To finance construction of this plant, Culver borrowed $607,200 from the bank on December 1, 2017. Culver had no other borrowings. The $607,200 was a 10-year loan bearing interest at 10%.

Compute the balance in each of the following accounts at December 31, 2017, and December 31, 2018. (Round answers to 0 decimal places, e.g. 5,275.)

December 31, 2017 & December 31, 2018

(a) Balance in Land Account

(b) Balance in Building

(c) Balance in Interest Expense

Answer 1

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