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Classification of Costs Associated with Assets The following account balances were included in Bromley Company’s balance sheet on December 31, 2018: During 2019, the following transactions occurred: 1. Land was acquired for $70,000 for a future building site. Commissions of $4,000 were paid to a real estate agent. 2. A factory and land were acquired from Kent Development Company by issuing 20,000 shares of $3 par common stock. At that time, the stock was selling for $10 per share on the New York Stock Exchange. The independently appraised values of the land and the factory were $60,000 and $180,000, respectively. 3. Equipment was acquired at a cost of $120,000. In addition, sales tax, freight costs, and installation costs were $7,000, $10,000, and $16,000, respectively. During installation, the equipment was damaged, and $2,000 was spent for repairs. 4. A new parking lot was installed at a cost of $30,000. 5. Half the land purchased in Item 1 was prepared as a building site. Costs of $26,000 were incurred to clear the land, and the timber recovered was sold for $3,000. A new building was built for $60,000. Architect’s fees relating to construction were $18,000, and imputed interest on equity funds used during construction was $15,000. No debt is outstanding. 6. Costs of $20,000 were incurred to improve some leased office space. The lease will terminate in 2021 and is not expected to be renewed. 7. A group of new machines was purchased under a royalty agreement that provides for payment of annual royalties based on units produced. The invoice price of the machines was $30,000, freight costs were $2,000, and royalty payments for 2019 were $12,000. Required: Prepare journal entries to record all the preceding events. Unless otherwise indicated, assume the company makes all payments in cash.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 10, Problem 2P
Textbook Problem

Classification of Costs Associated with Assets The following account balances were included in Bromley Company’s balance sheet on December 31, 2018:

Chapter 10, Problem 2P, Classification of Costs Associated with Assets The following account balances were included in

During 2019, the following transactions occurred:

  1. 1. Land was acquired for $70,000 for a future building site. Commissions of $4,000 were paid to a real estate agent.
  2. 2. A factory and land were acquired from Kent Development Company by issuing 20,000 shares of $3 par common stock. At that time, the stock was selling for $10 per share on the New York Stock Exchange. The independently appraised values of the land and the factory were $60,000 and $180,000, respectively.
  3. 3. Equipment was acquired at a cost of $120,000. In addition, sales tax, freight costs, and installation costs were $7,000, $10,000, and $16,000, respectively. During installation, the equipment was damaged, and $2,000 was spent for repairs.
  4. 4. A new parking lot was installed at a cost of $30,000.
  5. 5. Half the land purchased in Item 1 was prepared as a building site. Costs of $26,000 were incurred to clear the land, and the timber recovered was sold for $3,000. A new building was built for $60,000. Architect’s fees relating to construction were $18,000, and imputed interest on equity funds used during construction was $15,000. No debt is outstanding.
  6. 6. Costs of $20,000 were incurred to improve some leased office space. The lease will terminate in 2021 and is not expected to be renewed.
  7. 7. A group of new machines was purchased under a royalty agreement that provides for payment of annual royalties based on units produced. The invoice price of the machines was $30,000, freight costs were $2,000, and royalty payments for 2019 were $12,000.

Required:

Prepare journal entries to record all the preceding events. Unless otherwise indicated, assume the company makes all payments in cash.

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Chapter 10 Solutions

Intermediate Accounting: Reporting And Analysis
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