Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing. At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) San Antonio borrowed $4,100,000 at 8% on May 1 to help finance construction. This loan, plus interest, will be paid in 2022. The company also had a $5,950,000, 8% long-term note payable outstanding throughout 2021. In November, the company purchased 10 identical pieces of equipment and office furniture and fixtures for a lump-sum price of $670,000. The fair values of the equipment and the furniture and fixtures were $539,000 and $231,000, respectively. In December, San Antonio paid a contractor $320,000 for the construction of parking lots and for landscaping. INITIAL VALUATIONS   Land $1,005,417 Land improvements $320,000 Building $7,845,426 Equipment $469,000 Furniture & fixtures $201,000 What would be the journal entries for this problem using these entries?   Land     Discount on Note Payable           Cash           Note Payable         Land         Cash         Building         Cash       Building     Interest Expense             Cash       Equipment     Furniture and Fixtures         Cash       Land Improvements           Cash

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing.

At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
San Antonio borrowed $4,100,000 at 8% on May 1 to help finance construction. This loan, plus interest, will be paid in 2022. The company also had a $5,950,000, 8% long-term note payable outstanding throughout 2021.

In November, the company purchased 10 identical pieces of equipment and office furniture and fixtures for a lump-sum price of $670,000. The fair values of the equipment and the furniture and fixtures were $539,000 and $231,000, respectively. In December, San Antonio paid a contractor $320,000 for the construction of parking lots and for landscaping.

INITIAL VALUATIONS

 
Land $1,005,417
Land improvements $320,000
Building $7,845,426
Equipment $469,000
Furniture & fixtures $201,000

What would be the journal entries for this problem using these entries?

 

Land

   

Discount on Note Payable

   

      Cash

   

      Note Payable

   

 

 

Land

   

    Cash

   

 

 

Building

   

    Cash

   

 

Building

   

Interest Expense    

   

    Cash

   

 


Equipment

   

Furniture and Fixtures

   

    Cash

   

 

Land Improvements

   

      Cash

   
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Accounting for Long-Term contracts
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education