Question

Record the following transactions in the general journal of White Company for 201X:

Feb. 5     Purchased land for $93,000. The $93,000 included attorney’s fees of $6,300.

Feb. 18     White Company decided to pave the parking lot for $5,400.

Mar. 24     Purchased a building for $91,000, putting down 34% and mortgaging the remainder.

Mar. 29     Bought equipment for $36,000. Freight and assembly were an additional $3,600.

May 10     Added a new wing for $160,000 to building that was purchased on March 24.

June 15     Performed ordinary repair work on equipment purchased March 29, $850, to maintain its normal operations.

July 1     Bought a truck for $14,500.

Oct. 15     Added a hydraulic loader to truck, $2,300.

Nov. 30     Truck purchased in July was brought in for grease and oil, $32.

Dec. 30     Overhauled truck’s motor for $900, extending its life by more than one year.

Dec. 31     Changed tires on truck, $400.

Answer 1

	Journal Entry in the Books of White Company                 (Amount in $)
No.	Date	Name of Account & Description	Debit	Credit
1	Feb-05	Land	93000
		Cash		93000
		(Purchased land included attorny's Charges)
2	Feb-18	Parking lot	5400
		cash		5400
		(To parking lot paved)
3	Mar-24	Building	91000
		Cash		30940
		Mortgage Loan-Building		60060
		(To building purchased in 34% cash i.e. 91000*34%= $30940 & remaining mortgage i.e. 91000-30940= $60060)
4	Mar-29	Equipment	39600
		Cash		39600
		(To equipment cost capatilized inc. freight & installation charges)
5	May-10	Building	160000
		cash		160000
		(To new wing added in building)
6	Jun-15	Repair & Maintainance Expenses	850
		Cash		850
		(To equipment repaired)
7	Jul-01	Truck	14500
		Cash		14500
		(To truck purchased)
8	Oct-15	Truck	2300
		Cash		2300
		(To hydraulic loader added to truck)
9	Nov-30	Repair & Maintainance Expenses	32
		Cash		32
		(To grease & oil work done)
10	Dec-30	Truck	900
		Cash		900
		(To truck's motor overhauled)
11	Dec-31	Repair & Maintainance Expenses	400
		Cash		400
		(To truck's tyres changed)

If the expenses incurred to purchase an asset, extend its life/capacity/efficieny, it should be capatilized. We book expense in R&M head when it is incurred in normal course of business to maintain assets life/current position/effeciency.