Question

Determining Ending Balances in Land and Building Accounts Maldive Company completes the construction of a building. The following separate items are the costs relevant to the purchase of the lot and construction of the building. $260,000 Cash payments to contractor Sales tax on construction materials used in addition to contractor payments 7,800 Cost of land (building site) 130,000 Gross cost to raze old building on land 52,000 Proceeds from old building salvage 13,000 Utility charges for electricity used in construction 5,200 7,800 Capitalized interest on construction Determine the ending balance for the Land account and for the Building account. $ Ending balance in the Land account Ending balance in the Building account $ Support

Answer 1

Land Account Dr Amount Amount Particulars Particulars TO Cost of land To Gross Cost 130,000 52,000 By Balance C/d Total 182,000 182,000 Total 182,000 Building Account Dr Amount Amount Particulars Particulars 13,000 260,000 By Proceeds From Old Building 7,800 Salvage To Payment to Contractor To Sales Tax on material (Assume that not eligible for input) To Utility Charges To Interest on construction 5,200 7,800 By Balance C/d Total 267,800 280,800 Total 280,800