Record the following transactions in the general journal of

Record the following transactions in the general journal of White Company for 201X:

Feb. 5     Purchased land for $93,000. The $93,000 included attorney’s fees of $6,300.

Feb. 18     White Company decided to pave the parking lot for $5,400.

Mar. 24     Purchased a building for $91,000, putting down 34% and mortgaging the remainder.

Mar. 29     Bought equipment for $36,000. Freight and assembly were an additional $3,600.

May 10     Added a new wing for $160,000 to building that was purchased on March 24.

June 15     Performed ordinary repair work on equipment purchased March 29, $850, to maintain its normal operations.

July 1     Bought a truck for $14,500.

Oct. 15     Added a hydraulic loader to truck, $2,300.

Nov. 30     Truck purchased in July was brought in for grease and oil, $32.

Dec. 30     Overhauled truck’s motor for $900, extending its life by more than one year.

Dec. 31     Changed tires on truck, $400.

Solution

If the expenses incurred to purchase an asset, extend its life/capacity/efficieny, it should be capatilized. We book expense in R&M head when it is incurred in normal course of business to maintain assets life/current position/effeciency.