Project #78497 - Accounting HW

Gibbs Manufacturing Co. was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/14 per the books was as follows:

Date     Item   Amount
1/31/14   Land and dilapidated building   $200,000
2/28/14   Cost of removing building   3,900
4/01/14   Legal fees   6,190
5/01/14   Fire insurance premium payment   5,112
5/01/14   Special tax assessment for streets   4,780
5/01/14   Partial payment of new building construction   188,900
8/01/14   Final payment on building construction   188,900
8/01/14   General expenses   30,800
12/31/14   Asset write-up   74,000
        $702,582


Additional information:

1.   To acquire the land and building on 1/31/14, 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 $160.
2.   When the old building was removed, Gibbs paid Kwik Demolition Co. $3,900, but also received $1,460 from the sale of salvaged material.
3.   Legal fees covered the following:
Cost of organization   $2,600
Examination of title covering purchase of land   2,190
Legal work in connection with the building construction   1,400
    $6,190
4.   The fire insurance premium covered premiums for a three-year term beginning May 1, 2014.
5.   General expenses covered the following for the period 1/2/14 to 8/1/14.
President's salary   $20,700
Plant superintendent covering supervision of new building   10,100
    $30,800
6.   Because of the rising land costs, the president was sure that the land was worth at least $74,000 more than what it cost the company.


Determine the proper balances as of 12/31/14 for a separate land account and a separate buildings account.

 

Land   $
Buildings   $

Subject Business
Due By (Pacific Time) 08/06/2015 03:35 pm
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