Question

E9-2 Trudy Company incurred the following costs.
1. Sales tax on factory machinery purchased $ 5,000
2. Painting of and lettering on truck immediately upon purchase 700
3. Installation and testing of factory machinery 2,000
4. Real estate broker’s commission on land purchased 3,500
5. Insurance premium paid for first year’s insurance on new truck 880
6. Cost of landscaping on property purchased 7,200
7. Cost of paving parking lot for new building constructed 17,900
8. Cost of clearing, draining, and filling land 13,300
9. Architect’s fees on self-constructed building 10,000
Instructions
Indicate to which account Trudy would debit each of the costs.

Answer 1

Adama Company incurred the following costs.

Indicate to which account Adama would debit each of the costs.

1.		Sales tax on factory machinery purchased		$5,000		Select an account to be debited                                                           Land ImprovementsBuildingLandPrepaid InsuranceEquipment
2.		Painting of and lettering on truck immediately upon purchase		700		Select an account to be debited                                                           Land ImprovementsPrepaid InsuranceBuildingEquipmentLand
3.		Installation and testing of factory machinery		2,000		Select an account to be debited                                                           Prepaid InsuranceLand ImprovementsBuildingEquipmentLand
4.		Real estate broker’s commission on land purchased		3,500		Select an account to be debited                                                           EquipmentLand ImprovementsBuildingPrepaid InsuranceLand
5.		Insurance premium paid for first year’s insurance on new truck		880		Select an account to be debited                                                           Land ImprovementsEquipmentLandBuildingPrepaid Insurance
6.		Cost of landscaping on property purchased		7,200		Select an account to be debited                                                           Land ImprovementsBuildingLandEquipmentPrepaid Insurance
7.		Cost of paving parking lot for new building constructed		17,900		Select an account to be debited                                                           LandLand ImprovementsPrepaid InsuranceEquipmentBuilding
8.		Cost of clearing, draining, and filling land		13,300		Select an account to be debited                                                           BuildingPrepaid InsuranceEquipmentLand ImprovementsLand
9.		Architect’s fees on self-constructed building		10,000		Select an account to be debited                                                           Prepaid InsuranceLandBuildingEquipmentLand Improvements

1. Equipment
   

2. Equipment

3. Equipment

4. Land

5. Prepaid insurance

6. Land improvements

7. Land improvements

8. Land

9. Building