Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 9, Problem 9.1BPR
Allocating 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.
A. | Fee paid to attorney for title search............................................ | $ 3,600 |
B. | Cost of real estate acquired as a plant site: Land................................ | 720,000 |
Building (to be demolished)........... | 60,000 | |
C. | Finder's fee paid to real estate agency.......................................... | 23,400 |
D. | Delinquent real estate taxes on property, assumed by purchaser................. | 15,000 |
E. | Architect's and engineer's fees for plans for new building....................... | 75,000 |
F. | Cost of removing building purchased with land in (B)............................ | 10,000 |
G. | Proceeds from sale of salvage materials from old building....................... | 3,400* |
H. | Cost of filling and grading land................................................ | 18,000 |
1. | Premium on one-year insurance policy during construction...................... | 8,400 |
J. | Money borrowed to pay building contractor.................................... | 800,000* |
K. | Special assessment paid to city for extension of water main to the property....... | 13,400 |
L. | Cost of repairing windstorm damage during construction....................... | 3,000 |
M. | Cost of repairing vandalism damage during construction........................ | 2,000 |
N. | Cost of trees and shrubbery planted........................................... | 14,000 |
0. | Cost of paving parking lot to be used by customers............................. | 21,600 |
P. | Interest incurred on building loan during construction.......................... | 40,000 |
Q. | Proceeds from insurance company for windstorm and vandalism damage........ | 4,500* |
R. | Payment to building contractor for new building................................ | 800,000 |
S. | Refund of premium on insurance policy (1) canceled after 10 months............. | 1,400* |
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:
Item | Land | Land Improvements | Building | Other Accounts |
- 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 income statement and balance sheet if the cost of paving the parking lot of $21,600 [payment (0)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double-declining-balance method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Classify the accounts listed below by matching the account name with one of the following financial statementsections in which the account would be reported:a. Current Assetsb. Fixed Assetsc. Intangible Assetsd. Current Liabilitye. Long-Term Liabilityf. Owners’ Equityg. Revenuesh. Operating Expensesi. Other Income/Expense____ 31. Buildings____ 32. Accumulated Depreciation - Buildings____ 33. Depreciation Expense____ 34. Trademarks____ 35. Amortization Expense____ 36. Repairs Expense____ 37. Land Improvements____ 38. Gain on sale of equipment____ 39. Loss on disposal of asset____ 40. Loss from Impaired Goodwill
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…
Chapter 9 Solutions
Financial & Managerial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Distinguish between the accounting for capital...Ch. 9 - Immediately after a used truck is acquired, a new...Ch. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Is it necessary for a business to use the same...Ch. 9 - a. Under what conditions is the use of an...Ch. 9 - For some of the fixed assets of a business, the...Ch. 9 - A. Over what period of time should the cost of a...
Ch. 9 - Capital and revenue expenditures On August 7,...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Prob. 9.2APECh. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Prob. 9.3APECh. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double declining-balance depreciation Equipment...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Prob. 9.5APECh. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 9.7APECh. 9 - Prob. 9.7BPECh. 9 - Prob. 9.8APECh. 9 - Prob. 9.8BPECh. 9 - Fixed asset turnover ratio Financial statement...Ch. 9 - Prob. 9.9BPECh. 9 - Costs of acquiring fixed assets Melinda Staffers...Ch. 9 - Prob. 9.2EXCh. 9 - Prob. 9.3EXCh. 9 - Prob. 9.4EXCh. 9 - Capital and revenue expenditures Jackie Fox owns...Ch. 9 - Capital and revenue expenditures Quality Move...Ch. 9 - Nature of depreciation Tri-City Ironworks Co....Ch. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Prob. 9.9EXCh. 9 - Prob. 9.10EXCh. 9 - Depreciation by units-of-output method Prior to...Ch. 9 - Prob. 9.12EXCh. 9 - Depreciation by two methods A storage tank...Ch. 9 - Prob. 9.14EXCh. 9 - Revision of depreciation A building with a cost of...Ch. 9 - Prob. 9.16EXCh. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Prob. 9.18EXCh. 9 - Prob. 9.19EXCh. 9 - Prob. 9.20EXCh. 9 - Prob. 9.21EXCh. 9 - Balance sheet presentation List the errors you...Ch. 9 - Prob. 9.23EXCh. 9 - Prob. 9.24EXCh. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 9.26EXCh. 9 - Prob. 9.27EXCh. 9 - Entries for trade of fixed asset On October 1,...Ch. 9 - Prob. 9.1APRCh. 9 - Prob. 9.2APRCh. 9 - Depreciation by three methods; partial years...Ch. 9 - Prob. 9.4APRCh. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Allocating payments and receipts to fixed asset...Ch. 9 - Prob. 9.2BPRCh. 9 - Prob. 9.3BPRCh. 9 - Prob. 9.4BPRCh. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Ethics and professional conduct in business Dave...Ch. 9 - Financial vs. tax depreciation The following is an...Ch. 9 - Effect of depreciation on net income Tuttle...Ch. 9 - Fixed asset turnover: three industries The...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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_forwardClassifying assets Identify each of the following as (A) a current asset or (B) property, plant, and equipment: 1. Accounts Receivable 2. Building 3. Cash 4. Equipment 5. Prepaid Insurance 6. Suppliesarrow_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) $(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…arrow_forward
- 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) $(292,600 ) (b) Payment for construction from note proceeds 292,600 (c) Cost of land fill and clearing 11,790 (d) Delinquent real estate taxes on property assumed by purchaser 7,630 (e) Premium on 6-month insurance policy during construction 11,040 (f) Refund of 1-month insurance premium because construction completed early (1,840 ) (g) Architect’s fee on building 25,450 (h) Cost of real estate purchased as a plant site (land $200,400 and building $52,600) 253,000 (i) Commission fee paid to real estate agency 8,320 (j) Installation of fences around property 3,930 (k) Cost of razing and removing building 11,710 (l) Proceeds from salvage of…arrow_forwardAllocating payments and receipts to fixed asset accountsThe 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. A. Fee paid to attorney for title search.............. $2,500 B. Cost of real estate acquired as a plant site: Land 285,000 C. Delonquent real estate taxes on property, assumed by purchaser...... 15,500 D. Cost of razing and removing building acquired in B......... 5,000 E. Proceeds from sale of salvage materials from old building........ 4,000* F. Special assessment paid to city for extension of water main to the property...... 29,000 G. Architect's and engineer's fees for plans and supervision........ 60,000 H. Premium on one-year insurance policy during construction..... 6,000 I. Cost of filling and grading land............. 12,000 J. Money borrowed to pay building contactor....... 900,000* K. Cost of…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
- Allocating 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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $2,000 b. Cost of real estate acquired as a plant site: Land 280,000 Building (to be demolished) 55,000 c. Delinquent real estate taxes on property, assumed by purchaser 15,000 d. Cost of razing and removing building acquired in (b) 5,000 e. Proceeds from sale of salvage materials from old building 3,000 * f. Special assessment paid to city for extension of water main to the property 29,000 g. Architect’s and engineer’s fees for plans and supervision 60,000 h. Premium on one-year insurance policy during construction 7,000 i. Cost of filling and grading land 13,000 j. Money borrowed to pay building…arrow_forwardAllocating 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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $3,000 b. Cost of real estate acquired as a plant site: Land 290,000 Building (to be demolished) 60,000 c. Delinquent real estate taxes on property, assumed by purchaser 16,000 d. Cost of razing and removing building acquired in (b) 4,000 e. Proceeds from sale of salvage materials from old building 4,000 * f. Special assessment paid to city for extension of water main to the property 28,000 g. Architect’s and engineer’s fees for plans and supervision 70,000 h. Premium on one-year insurance policy during construction 5,000 i. Cost of filling and grading land 13,000 j. Money borrowed to pay building…arrow_forwardAllocating 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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $3,000 b. Cost of real estate acquired as a plant site: Land 280,000 Building (to be demolished) 55,000 c. Delinquent real estate taxes on property, assumed by purchaser 16,000 d. Cost of razing and removing building acquired in (b) 5,000 e. Proceeds from sale of salvage materials from old building 5,000 * f. Special assessment paid to city for extension of water main to the property 28,000 g. Architect’s and engineer’s fees for plans and supervision 70,000 h. Premium on one-year insurance policy during construction 7,000 i. Cost of filling and grading land 11,000 j. Money borrowed to pay building…arrow_forward
- Which of the following costs are reported on a company’s income statement and balance sheet? Select one: a. Cost of goods sold; Accumulated depreciation b. Gain on sale of land; Cost of goods sold c. Goodwill; Accounts payable d. Accumulated deprecation; Landarrow_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) $(280,800 ) (b) Payment for construction from note proceeds 280,800 (c) Cost of land fill and clearing 12,020 (d) Delinquent real estate taxes on property assumed by purchaser 7,470 (e) Premium on 6-month insurance policy during construction 12,360 (f) Refund of 1-month insurance premium because construction completed early (2,060 ) (g) Architect’s fee on building 28,020 (h) Cost of real estate purchased as a plant site (land $208,600 and building $50,000) 258,600 (i) Commission fee paid to real estate agency 8,480 (j) Installation of fences around property 3,960 (k) Cost of razing and removing building 10,190 (l) Proceeds from salvage of…arrow_forwardAssume a company pays delinquent property taxes totaling $3,000 as part of a new land purchase. The journal entry to record this payment should include a credit to “Cash” and a debit to: Land Property Taxes Payable Property Tax Expense Accumulated Depreciation Loss on Purchase of Propertyarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Property, Plant and Equipment (PP&E) - Introduction to PPE; Author: Gleim Accounting;https://www.youtube.com/watch?v=e_Hx-e-h9M4;License: Standard Youtube License