Exercise 105 Ben Sisko Supply Company a newly formed corpora

Exercise 10-5 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 $1,186 Architect’s fees 7,228 Cash paid for land and dilapidated building thereon 198,360 Removal of old building $45,600    Less: Salvage 12,540 33,060 Interest on short-term loans during construction 16,872 Excavation before construction for basement 43,320 Machinery purchased (subject to 2% cash discount, which was not taken). Company uses net method to record discount. 125,400 Freight on machinery purchased 3,055 Storage charges on machinery, necessitated by noncompletion of    building when machinery was delivered 4,970 New building constructed (building construction took 6 months from    date of purchase of land and old building) 1,105,800 Assessment by city for drainage project 3,648 Hauling charges for delivery of machinery from storage to new building 1,414 Installation of machinery 4,560 Trees, shrubs, and other landscaping after completion of building    (permanent in nature) 12,312 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. (Please leave spaces blank if there is no answer. Do not enter zeros in those spaces.)

Solution

Land Buildings Machinery & Equipment Other Abstract Company Fee for Title Search                 1,186.00 Architect\'s Fees               7,228.00 Cash Paid for Land & Old Building            198,360.00 Removal of Old Building               33,060.00 Interest on short-term loans during construction             16,872.00 Excavation before construction for basement             43,320.00 Machinery purchased               122,892.00           2,508.00 Freight On Machinery                    3,055.00 Storage charges on machinery           4,970.00 New building constructed       1,105,800.00 Assessment by city for drainage project                 3,648.00 Hauling charges for delivery of machinery           1,414.00 Installation of machinery                    4,560.00 Trees, shrubs, and other landscaping after completion of building               12,312.00 Total            248,566.00       1,173,220.00               130,507.00           8,892.00