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E10-5 (Treatment of Various Costs) Ben Sisko Supply Company, a newly formed corporation

E10-5 (Treatment of Various Costs) Ben Sisko Supply Company, a newly formed corporation
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Solution Guide / Answer Key:

ACC/422 (ACC422)
INTERMEDIATE FINANCIAL ACCOUNTING II
University of Phoenix (UoP)

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007).
Intermediate accounting, (12th ed.) (13th Ed.)
Hoboken, NJ: John Wiley & Sons.

Week Three (Week 3)
Chapter 9 and Chapter 10
E10-5 (Treatment of Various Costs) Ben Sisko Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 87,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was not taken) 55,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180
New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400

Instructions
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.

 

FILE: MS WORD

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