Question

Your answer is partially correct. Try again. Below are transactions related to Sweet Company. (a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $74,600. (b) 13,000 shares of common stock with a par value of $54 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $746,000, of which $194,280 has been allocated to land and $551,720 to buildings. The stock of Sweet Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $70 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $62 per share. (c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Materials used $12,160 966 15,580 Factory supplies used Direct labor incurred Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used 2,746 60% of direct labor cost Fixed overhead rate applied to regular manufacturing operations Cost of similar machinery if it had been purchased from outside suppliers 44,010 Prepare journal entries on the books of Sweet Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit (a) Land 74600

Answer 1

Sweet Company
Note:	Answer to part a & b are correct, answer to part c is shown below
Date	Account Titles	Debit	Credit
	Machinery	40,800.00
	Materials		12,160.00
	Supplies Consumed		966.00
	Direct Labour		15,580.00
	Overheads (Specific)		2,746.00
	Overheads (Fixed)		9,348.00
	Note: Cost of machinery is lower than replacement cost of similar machinery at market value. Had the cost of machinery been higher than replacement cost of machinery, such excess over replacement cost would not have been capitalised and would have been expensed out.