Question

In: Accounting

During 20182018​, Chun'sChun's Book Store paid $ 273 comma 000$273,000 for land and built a store...

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?

Solutions

Expert Solution

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

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