Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 10, Problem 1PA
The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.
Instructions
- 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:
- 2. Determine the amount debited to Land, Land Improvements, and Building.
- 3.
The costs assigned to the land, which is used as a plant site, will not be depreciated , while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation. - 4. What would be the effect on the current year’s income statement and balance sheet if the cost of filling and grading land of $12,000 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume that Land Improvements are depreciated over a 20-year life using the double-declining-balance method.
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The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a)
Money borrowed to pay building contractor (signed a note)
$(294,600
)
(b)
Payment for construction from note proceeds
294,600
(c)
Cost of land fill and clearing
10,250
(d)
Delinquent real estate taxes on property assumed by purchaser
7,170
(e)
Premium on 6-month insurance policy during construction
11,100
(f)
Refund of 1-month insurance premium because construction completed early
(1,850
)
(g)
Architect’s fee on building
26,350
(h)
Cost of real estate purchased as a plant site (land $208,600 and building $51,900)
260,500
(i)
Commission fee paid to real estate agency
9,500
(j)
Installation of fences around property
4,120
(k)
Cost of razing and removing building
10,230
(l)
Proceeds from salvage of…
The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a)
Money borrowed to pay building contractor (signed a note)
$(294,600
)
(b)
Payment for construction from note proceeds
294,600
(c)
Cost of land fill and clearing
10,250
(d)
Delinquent real estate taxes on property assumed by purchaser
7,170
(e)
Premium on 6-month insurance policy during construction
11,100
(f)
Refund of 1-month insurance premium because construction completed early
(1,850
)
(g)
Architect’s fee on building
26,350
(h)
Cost of real estate purchased as a plant site (land $208,600 and building $51,900)
260,500
(i)
Commission fee paid to real estate agency
9,500
(j)
Installation of fences around property
4,120
(k)
Cost of razing and removing building
10,230
(l)
Proceeds from salvage of…
The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a)
Money borrowed to pay building contractor (signed a note)
$(290,400
)
(b)
Payment for construction from note proceeds
290,400
(c)
Cost of land fill and clearing
11,780
(d)
Delinquent real estate taxes on property assumed by purchaser
7,360
(e)
Premium on 6-month insurance policy during construction
11,340
(f)
Refund of 1-month insurance premium because construction completed early
(1,890
)
(g)
Architect’s fee on building
25,930
(h)
Cost of real estate purchased as a plant site (land $207,300 and building $57,700)
265,000
(i)
Commission fee paid to real estate agency
9,860
(j)
Installation of fences around property
3,860
(k)
Cost of razing and removing building
10,800
(l)
Proceeds from salvage of…
Chapter 10 Solutions
Financial Accounting
Ch. 10 - ONeil Office Supplies has a fleet of automobiles...Ch. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Immediately after a used truck is acquired, a new...Ch. 10 - Keyser Company purchased a machine that has a...Ch. 10 - Is it necessary for a business to use the same...Ch. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - A building acquired at the beginning of the year...Ch. 10 - Equipment acquired at the beginning of the year at...Ch. 10 - A truck acquired at a cost of 69,000 has an...Ch. 10 - A tractor acquired at a cost of 420,000 has an...Ch. 10 - A building acquired at the beginning of the year...Ch. 10 - A building acquired at the beginning of the year...Ch. 10 - Equipment with a cost of 180,000 has an estimated...Ch. 10 - A truck with a cost of 82,000 has an estimated...Ch. 10 - On February 14, Garcia Associates Co. paid 2,300...Ch. 10 - On August 7, Green River Inflatables Co. paid...Ch. 10 - Equipment was acquired at the beginning of the...Ch. 10 - Equipment was acquired at the beginning of the...Ch. 10 - Prob. 7PEACh. 10 - Prob. 7PEBCh. 10 - On December 31, it was estimated that goodwill of...Ch. 10 - On December 31, it was estimated that goodwill of...Ch. 10 - Prob. 9PEACh. 10 - Prob. 9PEBCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Northwest Delivery Company acquired an adjacent...Ch. 10 - Warner Freight Lines Co. incurred the following...Ch. 10 - Jackie Fox owns and operates Platinum Transport...Ch. 10 - Quality Move Company made the following...Ch. 10 - Tri-City Ironworks Co. reported 44,500,000 for...Ch. 10 - Convert each of the following estimates of useful...Ch. 10 - A refrigerator used by a meat processor has a cost...Ch. 10 - A diesel-powered tractor with a cost of 180,000...Ch. 10 - Prior to adjustment at the end of the year, the...Ch. 10 - A John Deere tractor acquired on January 4 at a...Ch. 10 - A storage tank acquired at the beginning of the...Ch. 10 - Sandblasting equipment acquired at a cost of...Ch. 10 - A building with a cost of 1,200,000 has an...Ch. 10 - Willow Creek Company purchased and installed...Ch. 10 - Equipment acquired on January 8, 2013, at a cost...Ch. 10 - Equipment acquired on January 6, 2013, at a cost...Ch. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Apple Inc. designs, manufactures, and markets...Ch. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - The following table shows the revenue and average...Ch. 10 - Prob. 25ECh. 10 - Prob. 26ECh. 10 - Prob. 27ECh. 10 - On October 1, Bentley Delivery Services acquired a...Ch. 10 - The following payments and receipts are related to...Ch. 10 - Montes Coffee Company purchased packaging...Ch. 10 - Perdue Company purchased equipment on April 1,...Ch. 10 - New lithographic equipment, acquired at a cost of...Ch. 10 - The following transactions, adjusting entries, and...Ch. 10 - Prob. 6PACh. 10 - Prob. 1PBCh. 10 - Waylander Coatings Company purchased waterproofing...Ch. 10 - Prob. 3PBCh. 10 - New tire retreading equipment, acquired at a cost...Ch. 10 - The following transactions, adjusting entries, and...Ch. 10 - Prob. 6PBCh. 10 - Prob. 1CPCh. 10 - The following is an excerpt from a conversation...Ch. 10 - Tuttle Construction Co. specializes in building...Ch. 10 - Prob. 5CP
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- Allocate payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk. Instructions Determine the increases to Land, Lind Improvements. and Building.arrow_forwardIdentify the letter for the principle or assumption from A through F in the blank space next to situation that it best explains or justifies: _________If $51,000 cash is paid to buy land, the land is reported on the buyer’s balance sheet at $51,000.arrow_forwardThe following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses. (a) Money borrowed to pay building contractor (signed a note) $(282,600) (b) Payment for construction from note proceeds 282,600 (c) Cost of land fill and clearing 11,200 (d) Delinquent real estate taxes on property assumed by purchaser 8,870 (e) Premium on 6-month insurance policy during construction 10,260 (f) Refund of 1-month insurance premium because construction completed early (1,710) (g) Architect’s fee on building 25,770 (h) Cost of real estate purchased as a plant site (land $207,200 and building $52,900) 260,100 (i) Commission fee paid to real estate agency 9,490 (j) Installation of fences around property 4,130 (k) Cost of razing and removing building 9,910 (l) Proceeds from salvage…arrow_forward
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