Ben Sisko 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   $000520 Architect’s fees   3,170 Cash paid for land and dilapidated building thereon   87,000 Removal of old building $20,000   000Less: Salvage 0005,500 14,500 Interest on short-term loans during construction   7,400 Excavation before construction for basement   19,000 Machinery purchased (subject to 2% cash discount, which was not taken)   55,000 Freight on machinery purchased   1,340 Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered   2,180 New building constructed (building construction took 6 months from date of purchase of land and old building)   485,000 Assessment by city for drainage project   1,600 Hauling charges for delivery of machinery from storage to new building   620 Installation of machinery   2,000 Trees, shrubs, and other landscaping after completion of building (permanent in nature)   5,400 Instructions 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. Indicate how any costs not debited to these accounts should be recorded.

Question

Ben Sisko 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  
$000520
Architect’s fees  
3,170
Cash paid for land and dilapidated building thereon  
87,000
Removal of old building
$20,000
 
000Less: Salvage
0005,500
14,500
Interest on short-term loans during construction  
7,400
Excavation before construction for basement  
19,000
Machinery purchased (subject to 2% cash discount, which was not taken)  
55,000
Freight on machinery purchased  
1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered  
2,180
New building constructed (building construction took 6 months from date of purchase of land and old building)  
485,000
Assessment by city for drainage project  
1,600
Hauling charges for delivery of machinery from storage to new building  
620
Installation of machinery  
2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature)  
5,400

Instructions

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. Indicate how any costs not debited to these accounts should be recorded.

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