Blossom Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.
Debit
1. Excavation costs for new building $13,100
2. Architect’s fees on building plans 32,100
3. Full payment to building contractor 640,100
4. Cost of real estate purchased as a plant site (land $255,100 and building $25,100) 280,200
5. Cost of parking lots and driveways 28,100
6. Accrued real estate taxes paid at time of purchase of real estate 2,180
7. Installation cost of fences around property 5,810
8. Cost of demolishing building to make land suitable for construction of new building 24,100
9. Real estate taxes paid for the current year on land 5,810 $1,031,500
Credit
10. Proceeds from salvage of demolished building $ 11,000
Analyze the transactions using the following table column headings. Enter the number of each transaction in the Item column, and enter the amounts in the appropriate columns. For amounts in the Other Accounts column, also indicate the account title.

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TomShelby TomShelby · Answer 1 · 2019-11-25T15:53:28+01:00

Answer:

Building:

cost of bulding 25,100

write-off demolished building (25,100)

Balance: 0

Building under construction:

exacavation cost 13,100

architect's fees 32,100

contractor 640,100

Balance: 685,300

Land:

acquisition cost 255,100

property taxes paid at purchase 2,180

Balance: 257,280

Land improvements:

parking lot and driveways 28,100

fences 5,810

balance 33,910

period cost:

demolition expense 24,100

salvage from demolition (11,000)

property taxes expense 5810

loss at disposal (building) 25,100

balance: 44,010

Explanation:

For building and land we should follow the accounting procedure of include all the incurred or assumed cost to contruct and leave it ready to use.

As there is no indication that construction was completed we should assume the building is under construction.

As we demolish the old building we should write-off and recognize the loss and the demolition expense.

The property taxes after the purcahse are cost of the period.

Before the taxes were a necessary cost to acquire the land.

The salvage from the demolition decrease the expense are not considered revenue.