2. Gibbs Manufacturing Co. was incorporated on 1/2/25 but was unable to begin manufactu activities until 8/1/25 because new factory facilities were not completed until that date. The Land Buildings account set up by an inexperienced bookkeeper at 12/31/25 per the books was as follow Item Land and dilapidated building Cost of removing building Legal fees Fire insurance premium payment 5/1/25 Special tax assessment for streets Date 1/31/25 2/28/25 4/1/25 5/1/25 Amount $200,000 4,000 6,000 5,400 4,500
2. Gibbs Manufacturing Co. was incorporated on 1/2/25 but was unable to begin manufactu activities until 8/1/25 because new factory facilities were not completed until that date. The Land Buildings account set up by an inexperienced bookkeeper at 12/31/25 per the books was as follow Item Land and dilapidated building Cost of removing building Legal fees Fire insurance premium payment 5/1/25 Special tax assessment for streets Date 1/31/25 2/28/25 4/1/25 5/1/25 Amount $200,000 4,000 6,000 5,400 4,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
![G
IN
Comment
QUI
2. Gibbs Manufacturing Co. was incorporated on 1/2/25 but was unable to begin manufacturing
activities until 8/1/25 because new factory facilities were not completed until that date. The Land and
Buildings account set up by an inexperienced bookkeeper at 12/31/25 per the books was as follows:
Date
1/31/25
2/28/25
4/1/25
5/1/25
5/1/25
5/1/25
8/1/25
8/1/25
12/31/25
Item
Land and dilapidated building
Cost of removing building
Legal fees
Fire insurance premium payment
Special tax assessment for streets
Partial payment of new building construction
Final payment on building construction
General expenses
Asset write-up
Amount
$200,000
4,000
6,000
5,400
2025: 4,500
3. Legal fees covered the following:
Cost of organization
Examination of title covering the purchase of land
Legal work in connection with the building construction
210,000
210,000
30,000
75,000
$744,900
12%
Additional information regarding the purchase of the land and the construction of the new building in
2025:
President's salary
Plant superintendent covering supervision of new building
1. To acquire the land and building on 1/31/25, the company paid $100,000 cash and 1,000 shares of
its common stock (par value = $100/share) which is very actively traded and had a fair value per
share of $180.
2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000 and received $1,500
from the sale of salvaged material.
ayable
$2,500
2,000
1,500
$6,000
4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2025.
5. General expenses covered the following for the period 1/2/25 to 8/1/25.
$20,000
10,000
$30,000
construction
6. Because of the rising land costs, the president was sure that the land was worth at least $75,000
more than what it cost the company.
Instructions
Determine the proper balances as of 12/31/25 for a separate land account and a separate buildings
account. Label all the relevant amounts and disclose all computations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1659444d-b3d1-4a9f-ad81-60ab8fb7ee49%2Ff6819821-7cee-498d-8877-0da5eb07d7ff%2Fo2l69e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:G
IN
Comment
QUI
2. Gibbs Manufacturing Co. was incorporated on 1/2/25 but was unable to begin manufacturing
activities until 8/1/25 because new factory facilities were not completed until that date. The Land and
Buildings account set up by an inexperienced bookkeeper at 12/31/25 per the books was as follows:
Date
1/31/25
2/28/25
4/1/25
5/1/25
5/1/25
5/1/25
8/1/25
8/1/25
12/31/25
Item
Land and dilapidated building
Cost of removing building
Legal fees
Fire insurance premium payment
Special tax assessment for streets
Partial payment of new building construction
Final payment on building construction
General expenses
Asset write-up
Amount
$200,000
4,000
6,000
5,400
2025: 4,500
3. Legal fees covered the following:
Cost of organization
Examination of title covering the purchase of land
Legal work in connection with the building construction
210,000
210,000
30,000
75,000
$744,900
12%
Additional information regarding the purchase of the land and the construction of the new building in
2025:
President's salary
Plant superintendent covering supervision of new building
1. To acquire the land and building on 1/31/25, the company paid $100,000 cash and 1,000 shares of
its common stock (par value = $100/share) which is very actively traded and had a fair value per
share of $180.
2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000 and received $1,500
from the sale of salvaged material.
ayable
$2,500
2,000
1,500
$6,000
4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2025.
5. General expenses covered the following for the period 1/2/25 to 8/1/25.
$20,000
10,000
$30,000
construction
6. Because of the rising land costs, the president was sure that the land was worth at least $75,000
more than what it cost the company.
Instructions
Determine the proper balances as of 12/31/25 for a separate land account and a separate buildings
account. Label all the relevant amounts and disclose all computations.
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