Land Land improvements Buildings Machinery and equipment $100,000 20,000 300,000 500,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Classification of Costs Associated with Assets the following account balances were included in Bromley Company's balance sheet on December 31,2018:

During 2019, the following transactions occurred:

1.Land was acquired for $70,000 for a future building site. Commissions of $4,000 were paid to real estate agent.

2. A factory and land were acquired from Kent development  company by issuing 20,000 shares of $3 par common stock. At that time, the stock. At that time, the stocl was selling for $10 per share on the New york stock exchange. The independently appraised values of the land and the factory were $60,000 and $180,000 respectively.

3.Equipment was acquired at a cost of $120,000. In addition, sales tax, freight costs, and installation costs were $7,000, $10,000 and $16,000, respectively. During installation, the equipment was damaged, and $2000 was spent for repairs.

4.A new parking lot was installed at a cost of $30,000.

5.Half the land purchased in Item 1 was prepared as a building site. Costs of $26,000 were incurred to clear the land, and the timber recovered was sold for $3,000. A new building was built for $60,000. Architect's fees relating to construction were $18,000 and imouted intrest on equity funds used during construction was $15,000. No debt is outstanding.

6.Costs of $20,000 were incurred to improve some leased office space. The lease will terminate in 2021 and is not expected to be renewed. 

7. A group of new machines was purchased under royalty agreement that provides for payment of annual royalties based on units produced.  The invoice price of the machines was $30,000, Freight costs were $2,000, and royalty payments for 2019 were $12,000.

Required: 

Prepare journal entries to record all the preceding events. unless otherwise indicated, assume the company makes all payements in cash.

 

Land
Land improvements
Buildings
Machinery and equipment
$100,000
20,000
300,000
500,000
Transcribed Image Text:Land Land improvements Buildings Machinery and equipment $100,000 20,000 300,000 500,000
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