In: Accounting
During
20182018,
Chun'sChun's
Book Store paid
$ 273 comma 000$273,000
for land and built a store in
Lockport comma New YorkLockport, New York.
Prior to construction, the city of
LockportLockport
charged
Chun'sChun's
$ 1 comma 300$1,300
for a building permit, which
Chun'sChun's
paid.
Chun'sChun's
also paid
$ 15 comma 300$15,300
for architect's fees. The construction cost of
$ 745 comma 000$745,000
was financed by a long-term note payable, with interest costs of
$ 36 comma 200$36,200
paid at the completion of the project. The building was completed June 30,
20182018.
Chun'sChun's
depreciates the building using the straight-line method over 35 years, with estimated residual value of
$ 332 comma 300$332,300.
1. |
Journalize transactions for the following (explanations are not required): a. Purchase of the land b. All the costs chargeable to the building in a single entry c. Depreciation on the building for 20182018 |
2. |
Report
Chun'sChun's plant assets on the company's balance sheet at December 31,20182018. |
3. |
What will
Chun'sChun's income statement for the year ended December 31,20182018, report for these facts? |
1.) | a.) | Account Titles & Explanation | Debit $ | Credit $ | |
Land | 273,000 | ||||
Cash | 273,000 | ||||
( To record the land purchased ) | |||||
b.) | Account Titles & Explanation | Debit $ | Credit $ | ||
Building | 797,800 | ||||
Long Term Note Payable | 745,000 | ||||
Cash ( 1,300 + 15,300 + 36,200 ) | 52,800 | ||||
(To record building acquired on finance and costs charged to the building account) | |||||
c.) | Account Titles & Explanation | Debit $ | Credit $ | ||
Depreciation Expenses | 6,650 | ||||
Accumulated Depreciation - Building | 6,650 | ||||
( (797,800 - 332,300 ) / 35 ) x 6/12 | |||||
(To record depreciation charged on buidling ) | |||||
2.) | Balance sheet as at December 31 | Amount in $ | |||
Plant Assets: | |||||
Land | 273,000 | ||||
Building | 797,800 | ||||
Less: Accumulated Depreciation - Building | 6,650 | 791,150 | |||
Net plant assets | 1,064,150 | ||||
3.) | Income Statement for year ended December 31 | Amount in $ | |||
Expense : | |||||
Depreciation Expenses | 6,650 | ||||