Swifty Supply Company, a newly formed corporation, incurred the following expend

Question

Swifty Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment. Abstract company’s fee for title search $936 Architect’s fees 5,706 Cash paid for land and dilapidated building thereon 156,600 Removal of old building $36,000 Less: Salvage 9,900 26,100 Interest on short-term loans during construction 13,320 Excavation before construction for basement 34,200 Machinery purchased (subject to 2% cash discount, which was not taken) 99,000 Freight on machinery purchased 2,412 Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 3,924 New building constructed (building construction took 6 months from date of purchase of land and old building) 873,000 Assessment by city for drainage project 2,880 Hauling charges for delivery of machinery from storage to new building 1,116 Installation of machinery 3,600 Trees, shrubs, and other landscaping after completion of building (permanent in nature) 9,720 Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Company uses net method to record discount. (Please leave spaces blank if there is no answer. Do not enter zeros in those spaces.) Land Buildings Machinery and Equipment Other Abstract company’s fee for title search $ $ $ $ Architect’s fees Cash paid for land and old building Removal of old building Interest on short-term loans during construction Excavation before construction for basement Machinery purchased Freight on machinery purchased Storage charges on machinery New building constructed Assessment by city for drainage project Hauling charges Installation of machinery Trees, shrubs, and other landscaping $ $ $ $

Explanation / Answer

To Land To building To Mach Title search            936.00 Architects fees        5,706.00 Machinery Cost      99,000.00 Cost of old building    156,600.00 Evacuation basement      34,200.00 Freight        2,412.00 Cost of removal of old building      36,000.00 Assessment of drainage        2,880.00 Storage charges        3,924.00 Salvage value       -9,900.00 Cost of new building    873,000.00 hauling of machinery        1,116.00 trees etc        9,720.00 installation of machinery        3,600.00 Total Cost    183,636.00 Total Cost    925,506.00 Total Cost    110,052.00 Interest        2,006.27 Interest      10,111.38 Interest        1,202.35 Cost to capitalise    185,642.27 Cost to capitalise    935,617.38 Cost to capitalise    111,254.35

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