Book Store, Inc., opened an office in Cottage Grove, Minnesota. Book Store incurred the following costs in acquiring land, making landimprovements, and constructing and furnishing the new sales building:
This is a corrected assignemnt, I am wondering how to get the equation for the journal entries? Where do those numbers come from? I understand everything except the last 4
Book Store,
Inc., opened an office in
Cottage Grove,
Minnesota.
Book Store
incurred the following costs in acquiring land, making landimprovements, and constructing and furnishing the new sales building:
The company depreciates buildings over
30
years, land improvements over
15
years, and furniture over
12
years, all on a straight-line basis with residual values of zero.
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a. |
Purchase price of land, including an old building that will be used |
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for a garage (land market value is $315,000; building market |
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value is $85,000) |
$360,000 |
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b. |
Grading (leveling) land |
8,200 |
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c. |
Fence around the land |
31,600 |
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d. |
Attorney fee for title search on the land |
900 |
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e. |
Delinquent real estate taxes on the land to be paid by Book Store |
5,500 |
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f. |
Company signs at entrance to the property |
1,200 |
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g. |
Building permit for the sales building |
800 |
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h. |
Architect fee for the design of the sales building |
92,870 |
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i. |
Masonry, carpentry, and roofing of the sales building |
513,000 |
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j. |
Renovation of the garage building |
38,330 |
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k. |
Interest cost on construction loan for sales building |
9,400 |
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l. |
Landscaping (trees and shrubs) |
6,300 |
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m. |
Parking lot and concrete walks on the property |
52,800 |
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n. |
Lights for the parking lot and walkways |
7,300 |
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o. |
Salary of construction supervisor (87% to sales building; 10% |
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to land improvements; and 3% to garage building renovations) |
39,000 |
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p. |
Office furniture for the sales building |
79,100 |
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q. |
Transportation and installation of furniture |
900 |
Requirement 1. Identify the proper account (Land, Land Improvements, Sales Building, Garage Building, or Furniture) for each of the costs listed in the problem. Calculate the total cost of each asset.
Start with items a through i, next, enter items j through q, and lastly calculate the totals for each asset category. (If an input field is not used in the table leave the field empty; do not enter a zero. Round percentages to two places when calculating proportions (X.XX%), and use your computed percentages throughout. Round your final answers to the nearest whole dollar.)
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Land |
Sales |
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Garage |
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Item |
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Land |
Improvements |
Building |
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Building |
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Furniture |
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a. |
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$283,500 |
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$76,500 |
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b. |
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8,200 |
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c. |
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$31,600 |
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d. |
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900 |
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e. |
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5,500 |
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f. |
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1,200 |
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g. |
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$800 |
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h. |
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92,870 |
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i. |
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513,000 |
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Land |
Sales |
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Garage |
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Item |
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Land |
Improvements |
Building |
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Building |
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Furniture |
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j. |
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38,330 |
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k. |
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9,400 |
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l. |
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6,300 |
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m. |
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52,800 |
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n. |
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7,300 |
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o. |
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3,900 |
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33,930 |
1,170 |
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p. |
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$79,100 |
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q. |
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900 |
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Totals |
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$298,100 |
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$103,100 |
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$650,000 |
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$116,000 |
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$80,000 |
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Requirement 2. All construction was complete and the assets were placed in service on
April
- Record
depreciation for the year ended December 31. Round to the nearest dollar. (Record debits first, then credits. Exclude explanations from journal entries. Do not round intermediary calculations Only round the amount you input in the cell to the nearest dollar.)
Start by recording the depreciation on the land improvements.
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Journal Entry |
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Date |
Accounts |
Debit |
Credit |
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Dec |
31 |
Depreciation Expense - Land Improvements |
5,155 |
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5,155 |
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Next, record the sales building depreciation expense.
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Journal Entry |
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Date |
Accounts |
Debit |
Credit |
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Dec |
31 |
Depreciation Expense - Sales Building |
16,250 |
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Accumulated Depreciation - Sales Building |
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16,250 |
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Now record the garage building depreciation expense.
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Journal Entry |
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Date |
Accounts |
Debit |
Credit |
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Dec |
31 |
Depreciation Expense - Garage Building |
2,900 |
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Accumulated Depreciation - Garage Building |
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2,900 |
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Finish by recording the furniture depreciation expense.
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Journal Entry |
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Date |
Accounts |
Debit |
Credit |
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Dec |
31 |
Depreciation Expense - Furniture |
5,000 |
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Accumulated Depreciation - Furniture |
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5,000 |
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