Question

Presented below is information related to Monty Company.

1. On July 6, Monty Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:

Land		$500,000
Buildings		1,500,000
Equipment		1,000,000
Total		$3,000,000

Monty Company gave 12,400 shares of its $100 par value common stock in exchange. The stock had a market price of $168 per share on the date of the purchase of the property.

2. Monty Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. (Prepare consolidated entry for all transactions below.)

Repairs to building		$199,500
Construction of bases for equipment to be installed later		256,500
Driveways and parking lots		231,800
Remodeling of office space in building, including new partitions and walls		305,900
Special assessment by city on land		34,200

3. On December 20, the company paid cash for equipment, $494,000, subject to a 2% cash discount, and freight on equipment of $19,950.

Prepare entries on the books of Monty Company for these transactions.

Answer 1

Answer
Sr No	Account Titles and Explanation	Debit	Credit
1	Land (5/30* 2083200)	$ 3,47,200
	Buildings (15/30* 2083200)	$10,41,600
	Equipment (10/30* 2083200)	$ 6,94,400
	Common Stock (12400*100)		$12,40,000
	Paid-in Capital in Excess of Par		$ 8,43,200
2	Buildings ($199,500 + $ 305900)	$ 5,05,400
	Equipment	$ 2,56,500
	Land Improvements	$ 2,31,800
	Land	$     34,200
	Cash		$10,27,900
3	Equipment ($494,000-2%) + $19950	$ 5,04,070
	Cash		$ 5,04,070