Question

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

a.	Architect's and engineer's fees for plans and supervision		80,000
b.	Cost of filling and grading land		30,000
c.	Cost of removing building purchased with land in (e)		10,000
d.	Cost of paving parking lot to be used by customers		25,000
e.	Cost of real estate acquired as a plant site: Land ($375,000) and Building ($25,000)		400,000
f.	Cost of repairing windstorm damage during construction		5,000
g.	Cost of repairing vandalism damage during construction		1,800
h.	Cost of trees and shrubbery planted		12,000
i.	Delinquent real estate taxes on property, assumed by purchaser		20,000
j.	Fee paid to attorney for title search		3,000
k.	Finder's fee paid to real estate agency		4,000
l.	Interest incurred on building loan during construction		40,000
m.	Money borrowed to pay building contractor		775,000	*
n.	Payment to building contractor for new building		750,000
o.	Proceeds from insurance company for windstorm and vandalism damage		3,600	*
p.	Premium on one-year insurance policy during construction		7,500
q.	Proceeds from sale of salvage materials from old building		4,000	*
r.	Refund of premium on insurance policy (p) canceled after 10 months		1,250	*
s.	Special assessment paid to city for extension of water main to the property		10,500

Instructions:

1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form as follow: (“a” is done for you as an example)

Item                 Land                Land                            Building                      Other Accounts

                                          Improvements

    a.                                                                                       80,000

2. Determine the increases to Land, Land Improvements, and Building (total columns)

Answer 1

The table will be prepared in the following manner:

Workings

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