Question

Riverbed 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				$858
Architect’s fees				5,231
Cash paid for land and dilapidated building thereon				143,550
Removal of old building		$33,000
Less: Salvage		9,075		23,925
Interest on short-term loans during construction				12,210
Excavation before construction for basement				31,350
Machinery purchased (subject to 2% cash discount, which was not taken)				90,750
Freight on machinery purchased				2,211
Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered				3,597
New building constructed (building construction took 6 months from
date of purchase of land and old building)				800,250
Assessment by city for drainage project				2,640
Hauling charges for delivery of machinery from storage to new building				1,023
Installation of machinery				3,300
Trees, shrubs, and other landscaping after completion of building
(permanent in nature)				8,910

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. (Please leave spaces blank if there is no answer. Do not enter zeros in those spaces.)

		Land		Buildings		Machinery and Equipment		Other
Abstract fees		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Architect’s fees		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Cash paid for land and old building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Removal of old building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Interest on loans during construction		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Excavation before construction		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Machinery purchased		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Freight on machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Storage charges caused by noncompletion of building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
New building		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Assessment by city		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Hauling charges - machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Installation - machinery		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Landscaping		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount		$enter a total amount

Answer 1

Solution:

	Land		Buildings		M & E		Other
Abstract company’s fee for title search	$858
Architect’s fees			$5231
Cash paid for land and old building	$143550
Removal of old building
($33000 - $9075)	$23925
Interest on short-term loans during construction			$12210
Excavation before construction for basement			$31350
Machinery purchased (subject to 2% cash discount, which was not taken). Company uses net method to record discount.				$90750		$1815	—Misc. expense (Discount Lost)
Freight on machinery purchased					$2211
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered							$3597	—Misc. expense (Loss)
New building constructed (building construction took 6 months from date of purchase of land and old building)			$800250
Assessment by city for drainage project	$2640
Hauling charges for delivery of machinery from storage to new building							$1023	—Misc. expense
Installation of machinery					$3300
Trees, shrubs, and other landscaping after completion of building (permanent in nature)	$8910
	$179883		$849,041		$96261		$6435