Question

Oriole Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company’s fee for title search				$936
Architect’s fees				5,706
Cash paid for land and dilapidated building thereon				156,600
Removal of old building		$36,000
Less: Salvage		9,900		26,100
Interest on short-term loans during construction				13,320
Excavation before construction for basement				34,200
Machinery purchased (subject to 2% cash discount, which was not taken)				99,000
Freight on machinery purchased				2,412
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered				3,924
New building constructed (building construction took 6 months from
date of purchase of land and old building)				873,000
Assessment by city for drainage project				2,880
Hauling charges for delivery of machinery from storage to new building				1,116
Installation of machinery				3,600
Trees, shrubs, and other landscaping after completion of building
(permanent in nature)				9,720

Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Company uses net method to record discount

Answer 1

Ans-

	Land	Buildings	M & E	Other
Abstract company's fee for title search	$936
Architect's fees		5,706
Cash paid for land and old buliding	156,600
Removal of old building
(36,000-9,900)	26,100
Interest on short-term loans during construction		13,320
Exacavation before construction for basement		34,200
Machinery purchased (subject to 2% cash discount, which was not taken ) Company uses net method to record discount			97,020	1,980	-Misc. expense (Discount Lost)
Freight on machinery purchased			2,412
Storage charges on Machinery, necessiated by noncompletion of building when machinery was delivered				3,924	-Misc. Expense (Loss)
New building constructed		873,000
Assessment by city for drainage project	2,880
hauling charges fior delivery of machinery from storage to new building				1,116	-misc. expense
Installation of machinery			3,600
Trees, shrubs, and other landscaping after completion of building	9,720
	$196,236	$926,226	103,032	7,020