Question

Below are transactions related to Oriole Company.

(a)		The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $77,750.
(b)		13,000 shares of common stock with a par value of $52 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $777,500, of which $189,890 has been allocated to land and $587,610 to buildings. The stock of Oriole Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $67 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $60 per share.
(c)		No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.

Materials used		$11,570
Factory supplies used		866
Direct labor incurred		15,350
Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used		2,537
Fixed overhead rate applied to regular manufacturing operations		60% of direct labor cost
Cost of similar machinery if it had been purchased from outside suppliers		43,990

Prepare journal entries on the books of Oriole Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
(a)
(b)
(c)

Answer 1

Journal entries
Date	Particulars	Debit $	Credit $
a	Land	77750
	To Great Revenue		7750
	[being To record the fair value of land]
b	Building	587610
	Land	189,890
	To Share Capital - Ordinary [13000*52]		676000
	To Share Preimiun - Ordinary		101,500
	[To record the fair value of land and building]
c	Machinery	39,533
	To Direct Labour		15,350
	to Factory Overhead {note1}		12,613
	To materials		11,570
	[To record the machinery constructed]

Note 1 Calculation For Factory Overhead

Fixed overhead applied ($15,350 × 60%)	$9,210
Add: Additional overhead	$2,537
Add: Factory supplies used	$866
Total	$12,613