Determining Ending Balances in Land and Building Accounts
Maldive Company completes the construction of a building. The following separate items are the costs relevant to the purchase of the lot and construction of the building.
Cash payments to contractor | $100,000 | |
Sales tax on construction materials used in addition to contractor payments | 3,000 | |
Cost of land (building site) | 50,000 | |
Gross cost to raze old building on land | 20,000 | |
Proceeds from old building salvage | 5,000 | |
Utility charges for electricity used in construction | 2,000 | |
Capitalized interest on construction | 3,000 |
Determine the ending balance for the Land account and for the Building account.
Ending balance in the Land account | |
Ending balance in the Building account |
Cost of Land: | ||||
Cost of land | 50000.00 | |||
Gross cost of raze old building | 20000.00 | |||
Less: Proceeds from salvage of old building | -5,000 | |||
Cost of land | 65,000 | |||
Cost of building: | ||||
Cash payment to contractor | 1,00,000 | |||
Sales tax paid on material | 3,000 | |||
Utility charges during cnstruction | 2,000 | |||
Capitalized interest cost | 3,000 | |||
Cost of building: | 1,08,000 | |||
Ending balance of Land | 65,000 | |||
Ending balance of building: | 1,08,000 | |||
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