Question

Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $2,500 b. Cost of real estate acquired as a plant site: Land 285,000 Building (to be demolished) 55,000 c Delinquent real estate taxes on property, assumed by purchaser 15,500 d. Cost of razing and removing building acquired in (b) 5,000 e. Proceeds from sale of salvage materials from old building 4,000 f. Special assessment paid to city for extension of water main to the property 29,000 g. Architect's and engineer's fees for plans and supervision 60,000 h Premium on one-year insurance policy during construction 6,000 Cost of filling and grading land 12,000 j. Money borrowed to pay building contractor 900,000 k. Cost of repairing windstorm damage during construction 5,500 I Cost of paving parking lot to be used by customers 32,000 m. Cost of trees and shrubbery planted 11,000 n. Cost of floodlights installed on parking lot 2,000 o. Cost of repairing vandalism damage during construction 2,500 p. Proceeds from insurance company for windstorm and vandalism damage 7,500 q. Payment to building contractor for new building 800,000 34,500 Interest incurred on building loan during construction r. s. Refund of premium on insurance policy (h) canceled after 11 months 500 Required: 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Choose the correct account from the dropdown list for each letter and enter the appropriate amount. Enter receipts as negative amounts using the minus sign.

Answer 1

Answer 1:

a.	Land	$ 2,500
b.	Land	$ 3,40,000
c.	Land	$ 15,500
d.	Land	$ 5,000
e.	Land	$ - 4,000
f.	Land	$ 29,000
g.	Building	$ 60,000
h.	Building	$ 6,000
i.	Land	$ 12,000
j.	Other Accounts	$ - 900,000
k.	Other Accounts	$ 5,500
l.	Land Improvements	$ 32,000
m.	Land Improvements	$ 11,000
n.	Land Improvements	$ 2,000
o.	Other Accounts	$ 2,500
p.	Other Accounts	$ - 7,500
q.	Building	$ 800,000
r.	Building	$ 34,500
s.	Building	$ - 500

Answer 2:

Land	Land Improvements	Building
$400,000	$45,000	$900,000