Martin Buber Co. purchased land as a factory site for $400,000. The proc­ess of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Martin Buber paid $2,200 to an engineering firm for a land survey, and $68,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title ­insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor’s charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at the end of 3 months and $1,540,000 upon completion. Interest costs of $170,000 were incurred to finance the construction. Instructions Determine the cost of the land and the cost of the building as they should be recorded on the books of Martin Buber Co. Assume that the land survey was for the building.

Question

Martin Buber Co. purchased land as a factory site for $400,000. The proc­ess of tearing down two old buildings on the site and constructing the factory required 6 months.

The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Martin Buber paid $2,200 to an engineering firm for a land survey, and $68,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title ­insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor’s charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at the end of 3 months and $1,540,000 upon completion. Interest costs of $170,000 were incurred to finance the construction.

Instructions

Determine the cost of the land and the cost of the building as they should be recorded on the books of Martin Buber Co. Assume that the land survey was for the building.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Given Principal $14,500, Interest Rate 8%, Time 240 days (use ordinary interest)   Partial payment...

A: The amount of interest expenses refers to the fixed payment made by the borrower. It is charged at a...

Q: Down Inc. operates a large quarry in Central BC. Selected data from Down Inc. for the year ended Dec...

A: Solution 1. Profit Margin: Profit margin is the ratio of net income relative to the net sales. It is...

Q: Name three factors that will affect the classification of a cost as direct or indirect.

A: Cost: Cost refers to the expenses incurred by the business to earn revenue from sales, in other word...

Q: I wanted to know if this answer is good. I am getting this numbers from the URBN 10-K Annual Report ...

A: The quick ratio of a company is calculated to measure the short-term liquidity of the company. It is...

Q: “CVP analysis is both simple and simplistic. If you want realistic analysis to underpin your decisio...

A: CVP analysis refers to the cost-volume-profit analysis which describes the change in the operating i...

Q: Problem 9-13----2019The FUTA Tax (LO 9.6) Thomas is an employer with two employees, Patty and Selma....

A: a. Compute FUTA tax before the state tax credit as shown below:   FUTA is federal unemployment tax a...

Q: The following information is needed to reconcile the cash balance for Woods Paper Products. • A depo...

A: Definition:   Bank reconciliation: Bank statement is prepared by the bank. The company maintains its...

Q: Under what conditions is it appropriate for a business to use the composite method of depreciation f...

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its...

Q: May 24 Sold merchandise on account to Old Town Cafe $18,450. The cost of goods sold was $11,000. S...

A: Accounts receivable: Accounts receivable refers to the amounts to be received within a short period ...