Question

Below are transactions related to Wildhorse 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 $81,700.
(b)		13,000 shares of common stock with a par value of $53 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $817,000, of which $187,260 has been allocated to land and $629,740 to buildings. The stock of Wildhorse Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $68 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $61 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		$11,820
Factory supplies used		827
Direct labor incurred		14,500
Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used		2,762
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		44,870

Prepare journal entries on the books of Wildhorse Company to record these transactions

Answer 1

Account Titles & Explanation	Debit	Credit
(a)
Land	81,700
Contribution Revenue		81,700
b)
Land	1,87,260
Buildings	6,29,740
Common Stock ($53X 13,000)		6,89,000
Additional Paid-in Capital		1,28,000
(c)
Machinery	38,609
Materials		11820
Direct Labor		14500
Factory Overhead		12,289
*Fixed overhead applied        (60% X $14,500)	8700
Additional overhead	2,762
Factory supplies used	827
	12,289