Karen Sommers Travel Agency purchased land for $90,000 cash on December 10, 2011.

Karen Sommers Travel Agency purchased land for $90,000 cash on December 10, 2011. At December 31, 2011, the land’s value has increased to $93,000. What amount should be reported for land on Karen Sommers’s balance sheet at December 31, 2011? Explain.

Solutions

Expert Solution

Karen Sommers Travel Agency should report the land at $90,000 on its December 31, 2008 balance sheet. An important concept that accountants follow is the cost principle. The cost principle states that assets should be recorded at their cost. Cost has an important advantage over other valuations: it is reliable. Cost can be objectively measured and can be verified.

Karen Sommers Travel Agency must report land at $90,000, following the cost principle for reliability and objectivity.

Junaid answered 3 months ago

Next > < Previous

Related Solutions

The following information is taken from ABC Corporation's financial statements: December 31 2011 2010 Cash $90,000...

The following information is taken from ABC Corporation's financial statements: December 31 2011 2010 Cash $90,000 $ 27,000 Accounts receivable, net 87,500 76,900 Inventory 155,000 175,000 Prepaid expenses 7,500 6,800 Land 90,000 60,000 Buildings 287,000 244,000 Accumulated depreciation (32,000) (13,000) Patents 20,000 35,000 $705,000 $611,700 Accounts payable $ 90,000 $ 84,000 Accrued liabilities 54,000 63,000 Bonds payable 125,000 60,000 Common stock 100,000 100,000 Retained earnings 351,000 312,700 Treasury stock, at cost (15,000) (8,000) $705,000 $611,700 For 2011 Year Net income...

1. On January 1, 2020, Dreamland purchased land for $10,000 and a building for $90,000. The...

1. On January 1, 2020, Dreamland purchased land for $10,000 and a building for $90,000. The land was paid for with cash. The building was paid for with $5,000 cash and the remainder was financed with a 10-year notes payable. 2. Paid the accounts payable balance from 2019. 3. Purchase $500 of supplies on account. 4. Purchased 100 alarm systems (inventory) on account at a cost of $200 each. 5. Paid $6,000 of advertising expense during the year. 6. Sold...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $1,341,000 on January 1, 2018, the beginning of the year. During the year, dividends of $75,000 were paid. Accounts payable $ 69,500 Accounts receivable 236,500 Cash 190,500 Common stock 450,000 Fees earned 383,500 Land 1,500,000 Miscellaneous expense 14,500 Rent expense 22,500 Supplies 7,000 Supplies expense 11,300 Utilities...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2019, the...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2019, the end of the year, and its revenue and expenses for the year follow. The capital of Ian Eisele, owner, was $655,000 on January 1, 2019, the beginning of the year. During the year, Ian withdrew $35,000. Accounts payable $73,500 Accounts receivable 288,000 Cash 186,000 Fees earned 905,900 Land 542,000 Miscellaneous expense 6,600 Rent expense 30,000 Supplies 5,100 Supplies expense 4,200 Utilities expense 26,500 Wages...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2020, the...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2020, the end of the year, and its revenue and expenses for the year follow. The capital of Ian Eisele, owner, was $670,000 on January 1, 2020, the beginning of the year. During the year, Ian withdrew $42,000. Accounts Payable 69,500 Rent Expense 36,000 Accounts Receivable 285,000 Supplies 5,000 Cash 190,500 Supplies Expense 4,100 Fees Earned 912,500 Utilities Expense 28,500 Land 544,000 Wages Expense 510,000 Mis....

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $600,000 on January 1, 2016, the beginning of the year. During the year, dividends of $42,000 were paid. Accounts payable $ 69,500 Accounts receivable 285,000 Cash 190,500 Common stock 70,000 Fees earned 912,500 Land 544,000 Miscellaneous expense 6,400 Rent expense 36,000 Supplies 5,500 Supplies expense 4,100 Utilities...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. During the year, Ian withdrew $37,000. Accounts Amounts At Jan. 1, 2016: Ian Eisele, capital $645,000 At Dec. 31, 2016: Accounts payable $73,000 Accounts receivable 277,000 Cash 191,500 Fees earned 918,700 Land 547,000 Miscellaneous expense 6,000 Rent expense 34,000 Supplies 6,000 Supplies expense 4,200 Utilities expense 29,000 Wages expense 505,000 Required:...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $625,000 on January 1, 2018, the beginning of the year. During the year, dividends of $41,000 were paid. Accounts payable $ 68,500 Accounts receivable 274,000 Cash 187,500 Common stock 70,000 Fees earned 869,200 Land 544,000 Miscellaneous expense 6,500 Rent expense 40,000 Supplies 5,300 Supplies expense 4,400 Utilities...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the...

The amounts of the assets and liabilities of Journey Travel Agency at December 31, 2018, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $615,000 on January 1, 2018, the beginning of the year. During the year, dividends of $35,000 were paid. Accounts payable $ 73,500 Accounts receivable 288,000 Cash 186,000 Common stock 70,000 Fees earned 875,900 Land 542,000 Miscellaneous expense 6,600 Rent expense 30,000 Supplies 5,100 Supplies expense 4,200 Utilities...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the...

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $640,000 on January 1, 2016, the beginning of the year. During the year, dividends of $43,000 were paid. Accounts payable $ 65,500 Accounts receivable 264,000 Cash 180,500 Common stock 70,000 Fees earned 849,200 Land 541,000 Miscellaneous expense 6,900 Rent expense 32,000 Supplies 5,200 Supplies expense 4,100 Utilities...

Subjects