Adama Company incurred the following costs.Indicate to which account Adama would debit each of the costs. 1. Sales tax on factory machinery purchased $5,000 Select the account to be debited Prepaid InsuranceLand ImprovementsLandEquipmentBuilding 2. Painting of and lettering on truck immediately upon purchase 700 Select the account to be debited EquipmentPrepaid InsuranceLandLand ImprovementsBuilding 3. Installation and testing of factory machinery 2,000 Select the account to be debited BuildingLandLand ImprovementsPrepaid InsuranceEquipment 4. Real estate broker’s commission on land purchased 3,500 Select the account to be debited BuildingPrepaid InsuranceLand ImprovementsEquipmentLand 5. Insurance premium paid for first year’s insurance on new truck 880 Select the account to be debited BuildingLand ImprovementsLandEquipmentPrepaid Insurance 6. Cost of landscaping on property purchased 7,200 Select the account to be debited EquipmentLandBuildingLand ImprovementsPrepaid Insurance 7. Cost of paving parking lot for new building constructed 17,900 Select the account to be debited Land ImprovementsLandBuildingPrepaid InsuranceEquipment 8. Cost of clearing, draining, and filling land 13,300 Select the account to be debited Land ImprovementsEquipmentLandBuildingPrepaid Insurance 9. Architect’s fees on self-constructed building 10,000

Adama Company incurred the following costs.Indicate to which account Adama would debit each of the costs. 1. Sales tax on factory machinery purchased $5,000 Select the account to be debited Prepaid InsuranceLand ImprovementsLandEquipmentBuilding 2. Painting of and lettering on truck immediately upon purchase 700 Select the account to be debited EquipmentPrepaid InsuranceLandLand ImprovementsBuilding 3. Installation and testing of factory machinery 2,000 Select the account to be debited BuildingLandLand ImprovementsPrepaid InsuranceEquipment 4. Real estate broker’s commission on land purchased 3,500 Select the account to be debited BuildingPrepaid InsuranceLand ImprovementsEquipmentLand 5. Insurance premium paid for first year’s insurance on new truck 880 Select the account to be debited BuildingLand ImprovementsLandEquipmentPrepaid Insurance 6. Cost of landscaping on property purchased 7,200 Select the account to be debited EquipmentLandBuildingLand ImprovementsPrepaid Insurance 7. Cost of paving parking lot for new building constructed 17,900 Select the account to be debited Land ImprovementsLandBuildingPrepaid InsuranceEquipment 8. Cost of clearing, draining, and filling land 13,300 Select the account to be debited Land ImprovementsEquipmentLandBuildingPrepaid Insurance 9. Architect’s fees on self-constructed building 10,000

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter25: Departmental Accounting

Section: Chapter Questions

Problem 4SEA: ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado Lopez owns a furniture store that offers free...

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Adama Company incurred the following costs.

Indicate to which account Adama would debit each of the costs.

1.	Sales tax on factory machinery purchased	$5,000	Select the account to be debited Prepaid InsuranceLand ImprovementsLandEquipmentBuilding
2.	Painting of and lettering on truck immediately upon purchase	700	Select the account to be debited EquipmentPrepaid InsuranceLandLand ImprovementsBuilding
3.	Installation and testing of factory machinery	2,000	Select the account to be debited BuildingLandLand ImprovementsPrepaid InsuranceEquipment
4.	Real estate broker’s commission on land purchased	3,500	Select the account to be debited BuildingPrepaid InsuranceLand ImprovementsEquipmentLand
5.	Insurance premium paid for first year’s insurance on new truck	880	Select the account to be debited BuildingLand ImprovementsLandEquipmentPrepaid Insurance
6.	Cost of landscaping on property purchased	7,200	Select the account to be debited EquipmentLandBuildingLand ImprovementsPrepaid Insurance
7.	Cost of paving parking lot for new building constructed	17,900	Select the account to be debited Land ImprovementsLandBuildingPrepaid InsuranceEquipment
8.	Cost of clearing, draining, and filling land	13,300	Select the account to be debited Land ImprovementsEquipmentLandBuildingPrepaid Insurance
9.	Architect’s fees on self-constructed building	10,000

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